Posted by Al - So Cal on July 15, 2002 at 18:33:08:
I absolutely love you creative thinking. You can
definitely become an investor.
Everybody would have a different approach but if it
were me I would propose it this way because in turning
properties I made a huge amount of money the first
year and quit my job and never looked back:
I love this house and want to buy it.
Would you help me in this manner?
Give me 36 months to do it. Let me create credit line against it so I can invest it and turn property and make profit. In turn I will sign as co-signer on the note to the bank and split profits with you so you 25% of the profits. Here is an outline of my plan and how I plan to make my investments. I will gladly listen to your advice and modify my plan allowing for your experience. As you buy and sell you should always at least double money or better on each transaction. Youre rich quicker than you think.
This is kind of scarry but take a measely 10 thousand
and double it 5 times - youve got $320,000 dollars. Now how fast can you turn properties to do this? It pretty fast!
Here comes the madness. My wife and I currently live in a family members second home- her grandfather. First of all this could be a nice house with a little fix-up and average TLC, it’s been left empty for a few years, and another family member lived here, for free too. No one has taken care of the house. Now, through the grandfathers benevolence we live here (recently married, out of college).
I have heard from other family that selling the house has come up in conversation.
My idea is to buy the house, but on some untraditional terms. He is wealthy and does not need this house. I’m putting together a proposal offering him far more than the house is worth, if he will help me out with my real-estate endeavors.
The suggestions I’ve made are him deeding the property to me, in return I pay him 65% of all earnings as payment and interst.
The second suggestion is that he co-sign on a Home Equity LoC, and I will pay him the 65% of profits.
But I’m not happy with these suggestions. I don’t see why he would want to go for either of these ideas. He’s helpful and probably more than willing to loan the money (he has and does help many family members out financially), but I don’t want that, I want him to receive fair payment for his house, and me to receive the funds needed to turn real estate investing into a career.
Any ideas out there?
I have to give a fair price. I’m starting the offer 15-20k over fair, in move-in condition (which it is not). I am asking to withhold the first (maybe second) payment for improvements on the house.
Am I asking too much for him to essentially give me a house, and then let me pay him as I receive the money?
Would any of you go for it?
Thanks in advance for any help you can offer.
First off you should forget about paying more than the house is worth. Why should you? It’s not as if he were starving. Although if he were I’m sure you would help him out.
I think you should tell him you like the house, would like to stay there and fix it up, and would he sell it to you? Then (this is the hard part)shut up, sit back and see what he has to say.
If he asks what you have in mind, you might suggest that he set the price, hold a mortgage for the full amount and you pay him every month.
I assume you are not floating in money, and that if you recently graduated and joined the work force you have income but perhaps not enough of a credit history to get a conventional bank mortgage.
As an investor he should be happy to sell a house he no longer needs, and to get a nice check every month.
You should also look around and figure out how much the house is worth, as it sits. In other words find out what similar houses are going for and deduct the cost of repairs it needs to put it in the same shape. The real value would be somewhat less than this, after all why would anyone buy it and fix it up if they can go out and buy one already in good shape for the same money or less?
This is basically what you would do if you meant to keep it and live there.
I lean toward $Cash$'s suggestion. Don’t go in with a proposal, work together to come to a meeting of the minds. And you don’t have to have an agreement at the first meeting. You can throw around ideas and then think about them, come here for suggestions, and then go back to make progress to something that will benefit you both.
I am not enthusiastic about you offering him more than the property is worth. That kind of thinking is not conductive to making money in real estate. I appreciate that you want to be honest and not take advantage of your grandfather. That is admirable. But, in the process don’t give away more than is reasonable for you either.
Grandpa is apparently financial well off and has been successful. I would just say to him I want to get involved in real estate investing. However I will need some seed money to get started. If you were to help me what would be a fair return on your investment in me.
He probably made his money the hard way, he earned it. He will have no problem telling you what he will or won’t do.