Purchasing Off Market from an Elderly Neighbor - Best Option
Hello, I've befriended a neighbor in my neighborhood over the last couple of years who is in there 90's and no longer has any family left and doesn't necessarily know what they'd like to do with there house when they're gone. I told him I'd love to purchase it and we've agreed verbally that it would be ok, however what would be the best option to put together a legal contract or something similar? Would a scenario like this be an opportunity for a subject to? The house is paid off, but I'd like to make sure we close a deal in a timely fashion. Any tips or advice would be greatly appreciated.
If theres no debt on it....I dont think it would be subject to.
you also stated "after theyre gone" right? so this will be after death and not while theyre living correct?
I would make sure you are covered in a written contract in some way. Written contract leaves no room for misinterpretation on the potential sale of the property regardless of the situation. I would talk to a real estate attorney on how to best approach it with the seller.
Quote from @Kerry Noble Jr:
If theres no debt on it....I dont think it would be subject to.
you also stated "after theyre gone" right? so this will be after death and not while theyre living correct?
The deal would be made while they're alive and can agree with whatever terms we come to. I'm trying to figure out the best approach to do that now while they're still here. I was told the best option would be for me to purchase the home and then let him pay rent or live there rent free until they pass.
Not a subject to opportunity since there is no debt. I would speak with a local title company and they should be able to help you with creative solutions that allow you to take possession upon the death of the owner. You could structure it so that you buy it now and they remain as a tenant as in a life estate. Can you get traditional financing on the property? Owner financing doesn't seem like an option because they are likely going to want all of the money before they expire.
@Jim Doyle This could be a great opportunity or a dead end (no pun intended). You have motivation (old age) but beyond that you don't have much. From an investor prospective you need find and solve a problem for them. If they don't have a problem selling you makes no sense. Maybe they want to downsize? Maybe they hate mowing the lawn? Has anyone tried to find them accessed living? Money talks but when you're 90 years old it wayyyyy less of a concern.
"I was told the best option would be for me to purchase the home and then let him pay rent or live there rent free until they pass" - That idea has my interest peaked. That's a win-win situation for the right seller. It's hard to repair and upkeep property at that age.
Hey Jim,
I would think the best solution would be to buy the property form your neighbor. If he is happy staying there, I would allow him to pay rent until he passes. That's the best solution for both sides. You get your off market home while getting passive income, while he can continue to enjoy the rest of his life in his home.
Feels like he should call Tom Selleck about a reverse mortgage.
Quote from @Elias Osborne:
Hey Jim,
I would think the best solution would be to buy the property form your neighbor. If he is happy staying there, I would allow him to pay rent until he passes. That's the best solution for both sides. You get your off market home while getting passive income, while he can continue to enjoy the rest of his life in his home.
If the home is paid off then the owner is used to not paying rent/mortgage, so I don't know that all of a sudden having a payment on a fixed income will work for them.
Quote from @Joel Case:
Quote from @Elias Osborne:
Hey Jim,
I would think the best solution would be to buy the property form your neighbor. If he is happy staying there, I would allow him to pay rent until he passes. That's the best solution for both sides. You get your off market home while getting passive income, while he can continue to enjoy the rest of his life in his home.
If the home is paid off then the owner is used to not paying rent/mortgage, so I don't know that all of a sudden having a payment on a fixed income will work for them.
I was thinking more so paying for their utilities and etc. Whatever they are paying currently outside property tax, and have ownership transfer so nothing really changes outside of their current condition.
Quote from @Jaron Walling:
@Jim Doyle This could be a great opportunity or a dead end (no pun intended). You have motivation (old age) but beyond that you don't have much. From an investor prospective you need find and solve a problem for them. If they don't have a problem selling you makes no sense. Maybe they want to downsize? Maybe they hate mowing the lawn? Has anyone tried to find them accessed living? Money talks but when you're 90 years old it wayyyyy less of a concern.
"I was told the best option would be for me to purchase the home and then let him pay rent or live there rent free until they pass" - That idea has my interest peaked. That's a win-win situation for the right seller. It's hard to repair and upkeep property at that age.
Good point, the problem that I'm solving for him is he doesn't want to see his home scrapped and turned into condo's or townhomes which is what a lot of investors do. I told him that I would purchase this home; fix it up and start my family there (all truth, no lies) and he thought that was a great idea. He's happy living there currently and won't be moving anytime soon, I don't think it's been his forever home an I respect that.
Surprisingly the property is in pretty good shape; he has landscapers come monthly, all new windows put in a few years ago; new chimney, etc. lots of cosmetic updates need to be done, but overall it's in a great location. He did mention he wanted his money to go to charity, so I was pitching to him that he'd be alive and able to donate the house proceeds to charity himself and see the good that it does while he's still alive; so we shall see.
Quote from @Joel Case:Agreed, I would just buy it a steep discount and pay the mortgage. I think the hard part would be even though I want this to be my primary residence the bank would see it as an investment property so I'd have to put 20% down or more; even though the intention is for this to be my primary residence. I currently rent the house next door.
Quote from @Elias Osborne:
Hey Jim,
I would think the best solution would be to buy the property form your neighbor. If he is happy staying there, I would allow him to pay rent until he passes. That's the best solution for both sides. You get your off market home while getting passive income, while he can continue to enjoy the rest of his life in his home.
If the home is paid off then the owner is used to not paying rent/mortgage, so I don't know that all of a sudden having a payment on a fixed income will work for them.
Quote from @Elias Osborne:
Hey Jim,
I would think the best solution would be to buy the property form your neighbor. If he is happy staying there, I would allow him to pay rent until he passes. That's the best solution for both sides. You get your off market home while getting passive income, while he can continue to enjoy the rest of his life in his home.
To your later comment, he's definitely not going to pay any rent since the home has been paid off for over 20 years.
Quote from @Joel Case:
Not a subject to opportunity since there is no debt. I would speak with a local title company and they should be able to help you with creative solutions that allow you to take possession upon the death of the owner. You could structure it so that you buy it now and they remain as a tenant as in a life estate. Can you get traditional financing on the property? Owner financing doesn't seem like an option because they are likely going to want all of the money before they expire.
Yeah, figuring out the financing will be the next step; I'm a little confused as to how the bank will see this property. It will eventually be my primary residence, but since he's currently living there til X date; I assume I'd need to put 20% down and treat it as an investment property since I won't be currently living in it.
Quote from @Jim Doyle:
Quote from @Joel Case:Agreed, I would just buy it a steep discount and pay the mortgage. I think the hard part would be even though I want this to be my primary residence the bank would see it as an investment property so I'd have to put 20% down or more; even though the intention is for this to be my primary residence. I currently rent the house next door.
Quote from @Elias Osborne:
Hey Jim,
I would think the best solution would be to buy the property form your neighbor. If he is happy staying there, I would allow him to pay rent until he passes. That's the best solution for both sides. You get your off market home while getting passive income, while he can continue to enjoy the rest of his life in his home.
If the home is paid off then the owner is used to not paying rent/mortgage, so I don't know that all of a sudden having a payment on a fixed income will work for them.
Could you not setup a contract so that upon the current owners passing you buy the home at predetermined price, minus any payments that you made to the owner before they expired? Let's say they want $100,000 for the home, but effective immediately you pay them say $500 a month and those payments come off the purchase price.
Quote from @Joel Case:
Quote from @Jim Doyle:
Quote from @Joel Case:Agreed, I would just buy it a steep discount and pay the mortgage. I think the hard part would be even though I want this to be my primary residence the bank would see it as an investment property so I'd have to put 20% down or more; even though the intention is for this to be my primary residence. I currently rent the house next door.
Quote from @Elias Osborne:
Hey Jim,
I would think the best solution would be to buy the property form your neighbor. If he is happy staying there, I would allow him to pay rent until he passes. That's the best solution for both sides. You get your off market home while getting passive income, while he can continue to enjoy the rest of his life in his home.
If the home is paid off then the owner is used to not paying rent/mortgage, so I don't know that all of a sudden having a payment on a fixed income will work for them.
Could you not setup a contract so that upon the current owners passing you buy the home at predetermined price, minus any payments that you made to the owner before they expired? Let's say they want $100,000 for the home, but effective immediately you pay them say $500 a month and those payments come off the purchase price.
That way you could get an owner occupied loan on the property.