Posted by Ben (Ohio) on July 03, 2003 at 13:20:24:
Here is my thought (I focus on lease options and almost everything looks like a lease option to me, so bear that in mind!)…
Figure out the fair market value–check out free sites to see what the place is worth–if there’s not much equity, there may not be a reason to pursue something.
Figure out the legalities–disentangle the parties and learn what it will take and the willingness to separate her from the property. If there’s significant equity, it could get messy, but if it’s not much and if you can buy her out, consider that. I don’t have much experience here, but I’m thinking that if she’s ready to file bankruptcy to leave behind the place, then she should be happy to walk away if she can be released from it and free to pursue her own thing. The research and legwork might be significant.
If you can figure out these things, and it looks like what they owe is rather less than the value, then move on…
The basic technique is to find someone to “rent to own” this property and let your brother move out. You may have to do cosmetic cleaning to make it sale-able and attractive.
You offer the home (in the paper, put up signs and flyers, etc) at a monthly payment exceeding the mortgage payment, say, $700 if the market will support that. You require, say, 4 month’s money up front to move in. This is called “option consideration” and it secures the “tenant/buyer” the right to purchase the home at a fixed price (full retail value) in one year.
The monthly part is embodied in the lease contract. The option consideration is embodied in an option contract.
Your ad says: Rent to own xbed/xbath cape for $700/month 555-1212.
You have positive cash flow and your first investment deal.
You can call ads in the paper “we buy homes” tell them your story, see what they offer. This will likely tell you the wholesale market value of the house and another way to dispose of it.
The key is having good lease option contracts and grasping the concepts.
Also key in this case will be the divorce/disentanglement details.
It’s a way to move a property that puts tenants in there who want to own the place, will pay on time, and who will take care of the piddly maintenance contractually. It opens the potential market much wider than brokers and realtors can offer.
email me for more info if you want some.
I think you really need to figure out if you can disentangle stuff, as I think your intention to help rests on that situation.
Regards.