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Merry Christmas fellow investors,
I have a 4 bedroom 2 bath house with $120,000 cash invested and I want to sell the home releasing me from the liability of ownership and retain a half interest in the future appreciation. I would also like to look at options to share in part of the income if sold to another investor who would not be living in the home. I wrote this scenario out for selling to an end user. Does anyone have additional ideas for selling this home in Sacramento CA?Assume it’s worth $150,000 to an end user and $120,000 to an investor. This home was just rehabbed inside and out ready to move in or sell.
Option #1
? Sell home to an End User for $150,000 with a shared appreciation note splitting future appreciation 50/50
o Buyer procures a $90,000 conventional 6% loan amortized over 30 years. Payment is $539.60
o Buyer gives seller 10% down ($15,000)
o Seller wraps the new 1st mortgage of $90,000 with a second mortgage of $135,000
o The wrap around debt carries the same interest and payments as the first lien (6% and $539.60)
o The $135,000 wrap loan amortizes in reverse since the lower payment would not cover the 6% interest on the $135,000 wrapped second.
o The shared appreciation note contains the language that, upon sale of the property, the $135,000 plus the short fall in interest payments are paid in full and then the profits above $135,000 are split 50/50.
? Seller receives $105,000 at close of escrow leaving $15000 cash in the deal. Seller also has gained $15,000 equity plus the negative amortization on the $35,000 spread on the lower payments as well as 50% of the future up side on appreciation. He also is released from the liability of the home.
? Buyer gets a nice 4 bedroom 2 bath house for $15,000 down and $539.60 per month plus property taxes and insurance. Buyer also gets the tax benefits and low payments together with equity sharing.I think I got this right. Comments are welcome.
Thank you for your help.
Bo Snell
Advanced Realty SolutionsP.S. I’m challenging everyone to pull out all that great stuff we have learned from Jack and can’t remember how to apply it. I’ll take what we learn from this and post it back up to this thread in similar context to what’s above. I’ll also post what I decided to do.
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