Better Option Than a Reverse Mortgage

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  • I need some creative ideas! A man needs more income and he has equity in his home that he is not benefiting from. Home value is $285+. First mortgage is $115k at 5.125% and $762 P & I payment. Taxes and insurance are $350. After expenses, his equity is $150k. He doesn’t want to sell and move in with his girlfriend because she might “kick him out some day” but they may decide to move in together when her sister (age 85) passes. He is 76 and she is 71.
    How can I buy his home creatively to give him income and occupancy and pivot if he wants to move?
    Thanks for all of your ideas.
    Dave Patton


    Without knowing what he NEEDS, we are flying blind.

    First thought is – what about payment relief?

    What if you paid (or arranged to pay) his mortgage payment (or some portion of it)?
    He may have other debt that is high interest that can be paid off? Car loans, boat loans, credit cards, personal loans, etc.

    Might you exhange that for some of the equity in the house or an option to buy some or all of it?
    Does he own other property you might get an option on?

    If you made his mortgage payments for the next 3 years, what would he trade you?
    Only he can make that offer to you. Dig in. Ask.

    $762 + 350 = $1,112 per month or $13,344 per year.
    For 3 years, that’s $40,032.

    What kind of ROI is acceptable to you and the seller.
    If you want 18% — then you’d receive $52,570 in 3 years. Is that doable in HIS time frame?
    How would you secure it? A note and mortgage/T.D.?

    Would this exceed usury in his state?

    If $40,032 is too much, make half his payments.

    What about buying the house at some discounted price and have him lease it back from you? He would not have to move and his debt structure / cash flow position would surely be better for him.

    Don’t have the cash to buy it at a discount lying around, sell / jv with a partner for some of the profits. There is 1031 money available to invest in good deals.

    Don’t make a homeowner a loan.
    It won’t be worth your time and could cost you a lot if not done correctly.

    Or maybe a life estate.

    Keep us posted,


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