Re: Tired Landlord, Now what? - Posted by Bill Gatten
Posted by Bill Gatten on December 12, 1998 at 17:23:09:
In tune with B. Branstetter, but a different twist. The following is not a contradiction of Bud’s advice: its just another way to look at things:
I make much of my money by buying ?at or above? market, then getting someone else to cover all my costs, and payments: closing costs, management, maintenance, upkeep and property taxes, until appreciation can yield me a clear profit. Even without appreciation, if there is no DEpreciation, I make some money on the principal reduction in the loan that is being paid off by someone else, and by the complete absence of landlording costs. Kind’ve a Nothing Down and Nothing per-month deal, ya know…
Here?s what I do:
I go to your tired landlord and ask if he’d be interested in letting me take the property off his hands and allowing me to wait 3 years to refinance it. I explain that for that period time he needn’t transfer the title to me; but instead that he (at my expense) would place the property into a living trust for the benefit of both of us: but leave it in HIS name. I explain that I am willing to assume 100% percent of all costs, expenses, duties and obligation relative to the property. Then I do this:
Place the property in land trust (PACTrust™ in his name only
Next I have him execute an Assignment of Beneficiary Interest with 50 to 90% of the beneficiary interest coming to me, with an understanding that he is to forfeit his retained percentage to me at termination, upon disposition of the property. The percentages held don?t matter so long as the mortgagor retains at least 10%. Moreover, such assignment and forfeiture is conditioned wholly upon my prompt payments and strict adherence to all contracts terms for the duration of the Agreement.
We then execute a Beneficiary Agreement that stipulates how the trust property is to be handled by me as co-beneficiary.
Next, I execute a Triple Net Lease with the trust.
Finally (before COE), I put an ad in the newspaper saying, “No Bank Qual., No Down Payment?Closing costs only, and as little as two payments can move you in. #BR, 2c Gar, lg yard, etc. Call about Trust Property Opportunity.”
When they call, I say: “Yes? the property is presently in a trust; and what I’m looking for is someone who can afford the closing costs and the payments to pretty much just give it to. I’ll wait 3 years for my equity, but what I?d like in return for carrying it for you is–if the property has had any appreciation in that time, I’d like to split it with you.”
In this scenario, the property hasn’t costs me anything and I end up with half the equity build-up (loan principal reduction), half the appreication and all of the passive depreciation write-off for the entire period.
I?ve handled many 1,000?s of such calls, and rarely have spoken with anyone who doesn?t see my offer as a wonderful opportunity. (I currently have a bidding war going on over a $70K 3+1 in San Bernardino, Ca., which I?m handling this way. I started at $64K and $3,000 up front; and they?re up to $70K and $5,000 up front as of this writing).
The best of good fortune in whatever you do.