You must be logged in to reply to this topic.
-
Hello Cash Flow Depot family,
I am working with an older seller who would like to sell their (owned free and clear) house, but upon sale of the house, needs to split the profits with his brother’s heirs (his brother is deceased). Both he and his brother are on title.
So far, we’ve only agreed an all cash price of $490k for the property. Retail value in as is condition is $550k, ARV ~= $630k after $50k in repairs. The seller currently rents the property for $1500/month today (he splits the rents with his brother’s heirs), but current market rents are closer to $2300/month.
He likes the idea of cash flow, as he’s over 60. I also think he wants to simplify the situation by buying out his brothers’ heirs so they get what they need, and he gets the cash flow he wants. At the end of the day he’s not sure what he wants to do as he doesn’t know which option would be most beneficial to his situation.
Here’s where I need your help…
I want to present him some options other than an all cash offer to meet his cash flow needs, while allowing me to maintain control of the property.
A couple of questions:
1. Given that his brother passed, do his heirs have to also sign the contract for the sale of the house?
2. Is it more advantageous to the seller for me to finance (from a bank) $250k to fund the buy out of the heirs, and have the seller carry back paper for the balance? He’ll get less every month, but at least he gets all of that $ in his pocket?
3. Is it better that he pulls the $250k to pay off the heirs from his brothers’ trust, and for him to carry a note for the entire $490k purchase price? He makes the interest off of that entire note, and gets all of the monthly proceeds.Just want to do what’s best for the seller… I am thinking option 3 would be best, but wanted to run it by you folks.
Are there any other advantages/disadvantages with the latter 2 options I can share with the seller?
-Wil
A good way to structure this deal would be to create two notes to buy the house with seller financing. One note is sold at closing so the heirs get their cash. The other note produces cash flow.
look in the newspaper for people who advertise that they buy notes. A LOCAL note buyer is always better than some big company in a far away place.
Here are answers to your other questions:
1. Given that his brother passed, do his heirs have to also sign the contract for the sale of the house?
Did the brother have a will that gave the heirs his interest? The title company will need to see the will for proof. If there is no will, they can sometimes solve the problem with heirship affidavits.
2. Is it more advantageous to the seller for me to finance (from a bank) $250k to fund the buy out of the heirs, and have the seller carry back paper for the balance? He’ll get less every month, but at least he gets all of that $ in his pocket?
Don’t even think about bank financing. It is not necessary. and with the repairs, probably not liikely. if anyone gets a loan to pay the heirs, it should be the seller, not you.
3. Is it better that he pulls the $250k to pay off the heirs from his brothers’ trust, and for him to carry a note for the entire $490k purchase price? He makes the interest off of that entire note, and gets all of the monthly proceeds.
See the 2 note ideas above.
let us know how this turns out.
You must be logged in to reply to this topic.