I looked at this downtown duplex, it needs a full cosmetic rehab.
Owner has had it for over 30 years, no mortgage owing.
He showed me an expired listing for $159,000 last year, it didn't sell.
He has it listed above for $110 but as he was showing me around he said he will give it to me for $90k. It's a pretty big place. Once cleaned up it could rent for $1500 plus utilities. All separate meters.
As I was leaving, I said I would think about it, he said "Okay, make it $85,000."
I said, thanks Joe, I will let you know.
He called me a couple of days later and left a voice mail asking me to call him back.
Investor · Asheville, NC · Member since 2012 · 184 posts · 76 votes
14y
Brian Hoyt My dad is almost 78. He's got one rental left. He has owned it more than 27.5yrs. So it's all capital gains. He doesn't want to fuss with renting anymore, he will get close to nothing for the 90-100k after taxes if he puts in in the bank. He doesn't want to invest in something more risky. It's about preservation of wealth now for him. I don't want the rental (too far away). My brother is not interested in real estate. So he's going to owner finance it to a young couple who want to own a rental. He will get a good sales price and a much better interest rate. Amortize at 30 payoff at 10. The worst that happens is he gets the house back. If I inherit it, I get the income or sell the note for a wad of cash. What's not to like?
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
14y
The fact he dropped his price twice without you saying anything indicates motivation. Motivated and free and clear, there is certainly an opportunity. I would be tempted to make a low offer with owner financing.
Bellingham, WA · Member since 2012 · 14 posts · 2 votes
14y
It depends on many factors. Why is Joe selling? He sounds very motivated, but find out why. Use his desire to sell to your advantage. Find out what other similar properties are selling for and then compare it to those. You should be looking for a deal that is better than what is widely available.
Do you have experience rehabbing? Are there currently any tenants or is it vacant?
If you are confident in your ability to rehab and rent the units for a solid cash-flow, try to get a good owner financing deal with him. This could be an opportunity for you to add a good cash flow property to yor portfolio or maybe even do a quick rehab, rerent and flip it to the next guy. Many options, but many variables to consider.
Sounds like it could be a great opportunity. Keep us posted.
Windsor, Ontario · Member since 2012 · 10 posts · 0 votes
14y
@Ned: how low?
@Ibrahim: agreed.
@Tyler: It's seems like mostly a factor of the sellers age and not having the energy to fix it up. Plus it is a tough rental market here in Windsor.
I don't have the time or experience to rehab the place myself.
Both units are vacant.
Also, can someone please explain why he would want to do vendor financing? What's in it for him, assuming he just wants out.
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
14y
Originally posted by Jason C.:
Also, can someone please explain why he would want to do vendor financing? What's in it for him, assuming he just wants out.
Passive income. More passive than renting out a duplex.
Far higher interest rates that CDs or money market funds.
Safer, more predictable income than stocks or other options.
Collateral that is local and he knows the value of.
He could sell the mortgage if he needs to.
Wanting to get his estate in order. A paper asset should be easier to deal with real estate in probate.
Tax wise, could be treated as an installment sale rather than all tax due after sale. Not sure about Canadian taxes, though.
Investor · Fort Worth, TX · Member since 2011 · 1k+ posts · 450 votes
14y
Call me insensitive, but if I was 80, I'd not be interested in any kind of long term financing since I'd probably suspect I was going to die much sooner than later. I'd take the hit to make managing my finances that much easier in my super old age - unless I was interested in passing wealth down the line - in which case I probalby wouldn't sell. Its always worth a try, though. At the sub 3% interest rates on a 25 year mortgage you were talking about in Canada, you will need to get REALLY good OF terms to do much better than traditional financing.
Now, just because he dropped his price doesn't necessarily mean he's "motivated" any more than average. He might have it priced WAY over its worth and is well aware of it.
So, what are the comps and what is the estimated rehab? You say it will rent for 1500 + utilities. Is it renting for 750/side right now,or would it need the rehab first? What are the rent comps for units in both good and bad condition?
Investor · Asheville, NC · Member since 2012 · 184 posts · 76 votes
14y
Brian Hoyt My dad is almost 78. He's got one rental left. He has owned it more than 27.5yrs. So it's all capital gains. He doesn't want to fuss with renting anymore, he will get close to nothing for the 90-100k after taxes if he puts in in the bank. He doesn't want to invest in something more risky. It's about preservation of wealth now for him. I don't want the rental (too far away). My brother is not interested in real estate. So he's going to owner finance it to a young couple who want to own a rental. He will get a good sales price and a much better interest rate. Amortize at 30 payoff at 10. The worst that happens is he gets the house back. If I inherit it, I get the income or sell the note for a wad of cash. What's not to like?
Investor · Fort Worth, TX · Member since 2011 · 1k+ posts · 450 votes
14y
Originally posted by Kama Ward:
Brian Hoyt My dad is almost 78. He's got one rental left. He has owned it more than 27.5yrs. So it's all capital gains. He doesn't want to fuss with renting anymore, he will get close to nothing for the 90-100k after taxes if he puts in in the bank. He doesn't want to invest in something more risky. It's about preservation of wealth now for him. I don't want the rental (too far away). My brother is not interested in real estate. So he's going to owner finance it to a young couple who want to own a rental. He will get a good sales price and a much better interest rate. Amortize at 30 payoff at 10. The worst that happens is he gets the house back. If I inherit it, I get the income or sell the note for a wad of cash. What's not to like?
That makes a lot of sense. What does it mean to amortize a 30 year payoff at 10?
Investor · San Ramon, CA · Member since 2011 · 1k+ posts · 569 votes
14y
Originally posted by Brian Hoyt:
That makes a lot of sense. What does it mean to amortize a 30 year payoff at 10?
Make payments at such a rate it will take you 30 years to pay off the mortgage (30 year amortization) with a balloon payment for the balance of what's due in 10 years.
Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
14y
You need to be careful about elder abuse. If one of his kids gets the idea he was taken advantage of at 80 you have a bigger problem then the benefit of getting a good deal.
I'd be wanting some kind of family meeting and/or attorney approval from his side. Good luck on that.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
14y
You'll need to find out what his needs are in seller financing the deal, at his age he may need cash for other things, for other affairs. That could be a borrowed amount or a down payment. If he is living off that rent, he may want more than what a 30 yr amortization can produce. We just don't know. I'd suggest you call him back and ask if he'd be interested in taking a mortgage and briefly explain the benefits in the same breath. See what he says.....good luck