Posted by Shawn J. Dostie on February 14, 2003 at 20:25:11:
In dealing with the elderly, keep it real simple and know whether you are dealing with a benevolent benefactor or a dying copperhead. My advise would be to set up a land contract or contract for deed (depending on where you live) at a fair price and a low rate that allows for positive cashflow, and negotiate from there. Hopefully, this is the type of man who will give you a hand up and get you started.
Help with structuring a triplex deal!!! - Posted by Benihana
Posted by Benihana on February 14, 2003 at 12:44:01:
Thanks so much for taking the time to read this. Can you help me figure out the best creative approach to buying a triplex that I am looking at?
Here are the facts:
Seller has triplex (actually its a small house and a duplex on the same property) it was build in 1976. He owns it free and clear. It is near the California coast and has has seen VERY high appreciation. He is old, has a heart condition and is planning on dying in the next ten years or so. Seller wants to sell me the property on flexible terms, but wants to recieve a steady income from the property for the next five to ten years. The current market rents are a few hundred dollars higher than what he is currently charging the tenants. I know that buying the property, I will immediately have a positive cash flow.
Here’s what I’m thinking about doing:
I’m thinking of offering him a lease/option deal where I give him an upfront option payment that is a little higher than the monthly rental income that he is recieving. I will guarantee him his current rental income for the next 5-10 years and then cash him out completely at the set option price that we agreed on. I will take care of repairs in any given month up to and not exceeding $500, and if I fail to make the payment, he will keep all monies paid and I will lose the deal. I was thinking of using the tenant’s security deposits as part of the option payment, but I don’t know if I can get away with this!
I’ve also considered asking him to carry back financing on the deal and then I could pay him monthly payments that count toward the purchase price. I like this better than the lease option idea because I’m paying toward the purchase price instead of simply leasing the property from him and THEN buying it later.
What I’ll probably end up doing is I’ll probably line up the deal and then flip it to another investor because I don’t have enough cash reserves to cover me if something were to go wrong.
Any suggestions would be greatly appreciated! How would you go about buying a triplex that is owned free and clear?