Need confidence, guidance - Posted by Sybelle

Posted by Sybelle on December 18, 2000 at 24:43:50:

I’ve seen Real Estate Investing work for many people in my life. I’ve always felt like it was a dream that happened to others, not available to me because ____ (pick a reason). One of my daughters (I have 4 children) needs help and I think I can help steer her in the right direction. But it is like the blind leading the blind. I am overwhelmed with info, possibilities, and cold feet!
We live in Georgia. My oldest daughter (names changed to protect their privacy) Carmin and her husband leased a house for a year and invited the second daughter, Sara, and her family to live with them and share the rent. They did so. That lease expires at the end of January.
Sara and her husband are in their mid 20’s. Neither Sara nor her husband’s name is on the lease so they have no official way to prove they have paid rent faithfully. Sara’s husband makes minimum wage and has been on the job for about 1 1/2 years. (Since they moved here from up north). Sara’s employment record is spotty since they have an autistic son who requires special care. To make matters worse, they decided to file for BK since Sara had accumulated some debt during the year she spent at Johns Hopkins Univ. and they could not handle anything more than a bare existence. When my grandson was born, Sara and Frank, were barely 20 and very naive about life and it’s finances and they were in a “I know it all” attitude but trying to depend on others financially. I moved away to allow them the benefit of the schoool of hard knocks. It worked. For the past 1 1/2 yrs I have seen them grow up and become as financially stable as a couple with one child can be with a minumum wage salary. They eat pasta a lot. They have even started a fund to ensure that their autistic son will be taken care of when he grows up and they are not around anymore. I learned that you need to fall down in order to learn how to walk. But I also learned that an outstreched hand offering help will go a long way towards steadying the one who is taking baby steps towards that stretched hand not realizing that they are the ones doing the walking. Am I making any sense?
Anyway, for the Real Estate advice. Sorry the background took so long.
There is a HUD house around the corner from me that got me interested in the possibilities of Sara and Frank paying their monthly housing towards their own house rather than in rent going to someone else’s pocket.
Single Family, 3/2, good neighborhood. HUD wants $68,500. The cement slab has cracked all the way thru in the master bedroom and settled at an angle. There is a good possibility that it has lead paint. (My grandson chews the window sill when looking out the windows.) There are no appliances. There is a mature tree right next to one of the sides of the house that needs to come down before it rips appart what used to be the garage but was converted into a glass enclosed room that opens into the living room (no doors between the 2 rooms). The tax records list the property value at $75,000 but all the comps in the street have sold in the $60k range. A home revitalization project bid on it 4 time from Nov 1 to Nov 8, each bid for $59k. Then the house was listed for the general public on Nov 24. The house is located on the side of the street that floods and the drainage ditch runs at the back of the lot.
My realtor took us to look at properties and showed us another house first. This HUD home looked like a dump in comparison.
The other house we looked at also floods but the city works for that section were completed already. We have to wait another 3 years for the next flooding rain to happen before we can tell if it was effective and the house won’t flood anymore.
This second property was smaller 3/1, also backs to a drainage ditch, and there is a drainage pipe with a big hole around it in the back yard that would have to be fenced in. This house was MLS listed at $94,500, reduced for fast sale to $78,500. Well, when I went to do a title search the tax role lists it at $65k and it is a Life Estate. Not even my realtor knew about this so I do not know if the original owners are the ones living in the house or if it passed on to their son already. The one thing I know is that the “owner” listing the house is a minister who got trasferred out of state and he moved while his wife remained behind until the house sells. (She was home and my realtor asked about the flooding and the lady volunteered some information).
If the parents (original owners) passed on and the house is indeed owned by the son now, I think there might be a possibility of flexibility. She seemed motivated to be with her husband for Xmas which is around the corner. We would have to move fast. Maybe a lease purchase. Comps in this street are in the $60k also.
The problem I see here is the monthly payment Sara and Frank can afford. They can pay $450/mth, maybe stretch it to $500 if they eat more pasta and no meat. :slight_smile: Though my husband and I would be willing to co-sign, we cannot afford to pay any money, no down payment, nor monthly amounts at the moment. I am starting a business and I am self capitalizing. This business will be able to hire my daughter paying her $500 for every 3 hour class she teaches for me (I teach UNIX/Linux Sys Admin). But I am at the point of starting to market the 2 year program. Until I have the first 6 students there is a cash crunch in my household.
I have thought of an owner-financed 5 year balloon that could bring the monthly amount into range (maybe?) and give Sara and Frank the time to generate income and fix credit problems. Then I could try to turn around and market that note for the original owners so that they get their money out if they need it. ???
The biggest challenge I see: I do not know anybody! We bought our home 2 years ago using my veteran’s eligibility (yes, mommy is a vietnam vet :slight_smile: ) and my husband’s income. We don’t qualify for another mortgage right now since I’ve been using Credit Card debt to finance my business expenses. This debt will be drastically reduced when Tax refund times rolls along. My realtor (and other realtor’s I’ve spoken with) goes into a fog when I ask about creative financing, etc. so she is not help. My mortgage co. representative hung up on me several months ago when I tried to ask about possible RE Investment.
I feel like every door has been slammed on my face and I have no idea if there are any more doors I could try knocking on.
Anyone out there with some advice, encouragement, ideas? How do I approach the present owners of the better house to see if we can work something out? Do I just make an offer contingent on ___ (what?). Any help would be greatly appreciated. Sorry this was so long.