Hello,
I am talking with a couple that might be interested in selling a property on LC. It is actually her fathers property, and he is in assisted living home, and she has Power of Consent or however that is stated. Father still has quite a bit of cash to pay his expenses so there is not an issue of Assited Living home wanting the money.Father curently has most of his assets in CD = low rate of return.
The property consisting of a very nice 3/2 brick home, and a separate 'office' (the size of a 2 car garage) that is used as a Beauty Salon with a renter that has been there (salon) for 20+ years and would like to stay. The house has never been rented before. There
They are looking to get rid of it as it is obvious that 'dad' wont be returning home, and they have no interest in being landlords. I have an existing relationship with them from my 'day job' of contracting and we have hit it off really well.The property had been listed for 6 months, starting at about 150K, and they dropped down to 100K over 6 months. No offers, some lookers. It is 'assessed' at 135K. Needs minor painting on outside trim, a few other minor things.
My thoughts on a proposal are to buy it with either $0 or a couple thousand down on a land contract, offer an 'attractive' interest rate, and maybe do a balloon in 3-5 years and get conventional financing at that point. I would like obviously make this a good deal for me, but them too. I think being in a small town, and them knowing a lot of simialr aged people, they could be a good reference for me on future deals.
So, what is 'fair to both parties? 4-5% interest? how many years to the balloon? What other factors? How could the fathers health care cost affect a LC pro or con?
If we did 95K @ 4.5% amt. for 30 years the payments, taxes, and ins. would run about $660 a month. The salon brings in $400, and I think the home could get $750 - $850. Lets call it $1200 total.
Is this a good deal for each of us? I know it doesn't fit the 50% rule, but it also seems like a way to get into a property for next to none of my own money, and a fairly low maintenance home.
What other things would I need to be aware of with a LC?
Thanks, Dan
