Help me explain Seller Financing to Grandma!
Investor · Cambridge, MA · Member since 2013 · 264 posts · 104 votes
Help me explain Seller Financing to Grandma!
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Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
10yGrandma, I'd like you to carry the paper. (That is generally how older folks refer to it.)
Here is why:
Let's say you need $200/month to live. If I pay you $20,000 for your house, you put that money in the bank and collect .01% interest. Every month you go down and take out your $200. In 101 months from now, you're cutting coupons for Alpo and standing in line at the grocery store pretending you have a dog just so you have something to eat for dinner.
Now let's say you carry the paper. If I pay you 5% on your $20,000 and we do it over a 10 year period, You collect $212.13 every month for the next 10 years. That means you get to eat your Raisin Bran, Quaker Oats, prunes, bread pudding, meatloaf, green bean casserole, fruit cocktail and still have $12.13 extra every month to save for a trip to Cracker Barrel or buy some hard candy. But just between you and me grandma, and as much as I love you, if you're still walking the planet in 10 years, I'm going to take you to the top of the basement stairs and give you a little nudge. I mean, nobody, absolutely NOBODY in the family expects you to last more than 6. Uncle Rico even went in on 4 years!
So, what do you think grandma, sound like a good plan?
29 Replies
- Investor · Honolulu, HI · Member since 2013 · 3k+ posts · 1k+ votes10y
Is this a $60,000 or $600,000 property. Is Grandma buying a replacement property?
- Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes10y
Grandma, I'd like you to carry the paper. (That is generally how older folks refer to it.)
Here is why:
Let's say you need $200/month to live. If I pay you $20,000 for your house, you put that money in the bank and collect .01% interest. Every month you go down and take out your $200. In 101 months from now, you're cutting coupons for Alpo and standing in line at the grocery store pretending you have a dog just so you have something to eat for dinner.
Now let's say you carry the paper. If I pay you 5% on your $20,000 and we do it over a 10 year period, You collect $212.13 every month for the next 10 years. That means you get to eat your Raisin Bran, Quaker Oats, prunes, bread pudding, meatloaf, green bean casserole, fruit cocktail and still have $12.13 extra every month to save for a trip to Cracker Barrel or buy some hard candy. But just between you and me grandma, and as much as I love you, if you're still walking the planet in 10 years, I'm going to take you to the top of the basement stairs and give you a little nudge. I mean, nobody, absolutely NOBODY in the family expects you to last more than 6. Uncle Rico even went in on 4 years!
So, what do you think grandma, sound like a good plan?
- Investor · Cambridge, MA · Member since 2013 · 264 posts · 104 votes10y
@Account Closed 370K ARV -- needs 20K to get there (roughly)
Grandma will be renting for the rest of her days after the sale - small apartment where she doesn't have to worry about lawn mowing or snow removal here in Massachusetts .
@Aaron Mazzrillo Man do you have a way with words ---- the underlying message being to make clear the killer extra monthly collections from hitting her eldest grandson with interest charges.
- 10yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Aaron Mazzrillo welcome back from vacation.
epic run of steelhead partners son hooked 16 all natives but one to 16 lbs.
plan on Feb !!!
- Investor · Cambridge, MA · Member since 2013 · 264 posts · 104 votes10y
@Jay Hinrichs Have you purchased small multi family homes with seller financing?
- 10yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Jim Sestito no I only pay cash genrealy but I have sold a bunch !!! like more than 25 or so.. maybe closer to 50.. mainly sfr's and duplex's.
I sold much of my OREO back in 09 to 2011 seller carry.
My best deals were to get 10 to 20% down and then carry the balance at 7 years NO INTEREST.. this worked well for buyer as we know you really can't get rich in RE unless you own a crap load of doors and or you own it free and clear.. most of my notes are now paid I had zero defaults when I did this.. and the buyers though sacrificing cash flow early on now own free and clear units.. that's what I call a win win
- Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes10y
Originally posted by @Jay Hinrichs:
@Aaron Mazzrillo welcome back from vacation.
epic run of steelhead partners son hooked 16 all natives but one to 16 lbs.
plan on Feb !!!
Good to be back. No fishing for me. Daughter is slowly killing me with sleep deprivation. Amazing how little sleep the human body can survive on. Was up all night last night, went to bed at 10am, got up a noon and have been hitting it hard ever since. Coffee - it's what's for breakfast, lunch... and dinner.
- 10yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Aaron Mazzrillo Ok next year then... hopefully the run will be as strong..
I still have massive tendonitis in my elbow from last months Salmon extravaganza its amazing how catch 4 30 lber bright fish will torch your elbows.. LOL.. not much sympythy for those injuries though
- Real Estate Investor · Worcester, MA · Member since 2013 · 11 posts · 19 votes10y
@Jim Sestito is this your grandmother? If it's your grandmother's home this is definitely something that I'm sure the rest of your family (or hers if you're not related) will be interested in being a part of. The home would likely be passed on or sold and the funds distributed. It can be a touchy issue if not everyone agrees. You need to work out a deal that makes sense for both parties and show her that you are not taking advantage of her. There are a lot of reasons why she would be weary of such a transaction so you need to work out all of the details before she is set against it.
1. Are you planning on living in the one bedroom? Potentially do a contract where you lease the one bedroom with an option to buy? This may be the easiest to convince her to go with as she may not be ready to sell yet. If you rented the one bedroom she will see you taking care of the property in the mean time, etc. and may make her more open to other options to buy the property from her in the future.
2. If she holds the note are you planning on putting a downpayment? Pay off her car loan as it seems to be secured by the house?
3. Are you unable to get a (conventional) loan? Are you looking to get a lower interest rate than banks can offer? If she is related to you I'm sure you could get a good deal on the price and do a conventional loan, leaving her out of the financing part. The payments of a 30 year loan may be more favorable to you, especially with rates today. An elderly person would never hold a note that long - 10 years max and then if something happens to her before the note matures you would have to work out where the remainder of the payments would be sent.
4. If she did seller financing would she live for free (more like a reverse mortgage) or would she pay you rent? Are you putting something to guarantee her that you won't buy the property and have her move out?
Lots of options but think about these questions in order to structure a deal that is mutually beneficial.
Best of luck!
John
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes10y
The only 80+ y/o I know still offering seller financing is doing it for estate purposes. If she needs the money, I wouldn't ask. Sounds like she may not need it, but I would check with other family as well lilke @John Prunier. Approach it lightly and kinda ask if she would rather have an 'annuity' vs a pile of cash.
My grandma would not be my first seller carry. I do these regularly and am glad I learned the ropes with normal arms-length sellers @Jim Sestito. Screw it up with grandma and you'll be in the family dog house for decades.
- Specialist · Newberg, OR · Member since 2009 · 93 posts · 71 votes10yJim, You're asking the right questions at the end of the post...why would this be beneficial to her? It all depends on her circumstances. Cash may not be what she needs or what's even good for her. What are her alternatives if she gets cash? Putting her money in the ups and downs of the stock market? Investing in a CD or bonds with a super low yield? You can provide her with a better yield, better security by securing it against the property and better customer service. If she needs the cash to buy something else to downsize it may not be the best option for her. Or she can carry part of it back. As far as why it's good for you? A ton more options in building flexibility into the note terms. Ability to recollateralize the note later, not having a loan on your credit, dealing with a person vs a bank...seller financing is the way to go whoever you can get it.
- Investor · Cambridge, MA · Member since 2013 · 264 posts · 104 votes10y
@John Prunier Hey I'm asking the questions here! - No kidding - those are great points. This is my grandmother - she is financially secure - still works bc she loves her work - but does have three children who I am sure will be interested in any activity of the home.
My key purpose of posting this was to confirm the benefits of seller financing to the buyer and to the seller.
I could get a conventional loan but as @Ben Nelson stated one less loan on the balance sheet - not dealing with a bank - being able to create the terms myself. Benefits for grandma is she is getting cash (I would certainly give some down payment so grandma can have somewhat of an instant payday) a check for 1,400 - 1,600 a month that is 100% passive.
@Steve Vaughan She doesn't need cash. This is truly a case of the house is too big - she doesn't want to be a landlord anymore (although she rented the apartment for 25 years and never had more than 2 months of vacancy and never had one eviction) Doesn't want to deal with landscapers and plow guys to maintenance the house.
I guess the question remains how do I bring this up to her children - how will it work if the note lives longer than grandma. I am sure it could work out that the payments would go to an estate for the kids they could divide.
Thanks for the feedback thus far and would love to hear other stories if anyone else has done a similar deal.
- Oro-Medonte, Ontario · Member since 2015 · 24 posts · 18 votes10y
The benefits to you are quite obvious. The benefits/risks for Grandma are more tax and performance related.
In Canada capital gains on a person's principle residence are tax free, although the income from the apartment does complicate things a bit. In the USA Grandma may have a huge capital gains liability due in one tax year if she were to sell normally, particularly if she has held the house for quite some time. Her holding a note and receiving payments over time allows her to spread out that capital gain tax implication over a longer period. I would of course clarify this with a local tax expert.
There are also risks for Grandma too, and I am sure that because she is your Grandma you will want to minimize those risks. Apart from potential hard feelings with the rest of the family, there is also risk if you do not perform as agreed. You may be assuming that you will outlive Grandma, however you could be hit by a bus one morning (as terrible as that would be). Where would that leave Grandma? Be sure those contingencies are covered. Also make sure things are spelled out regarding this note as far as Grandma's estate is concerned. Are you planning on refinancing the property when she dies and placing that money into her estate? Since you are receiving most of the benefit of this arrangement, you should probably help out your Grandma and pay for an Estate Planner to help her arrange things.
As you can see, once you want to ensure the other party is taken care of things can get a little more complicated...
- 10yDion DePaoliPro MemberReal Estate Broker · Northwest Indiana, IN · Member since 2011 · 2k+ posts · 2k+ votes
I didn't read all the responses but I figure I will be a little counter-intuitive here. This is NOT a good deal for grandma at 80 years old. It is not clear what so ever why she would want to Seller finance a house that she has managed to pay off for the most part at the latter portion of her life.
Where will she live? How will she obtain that housing? Did her living cash shrink?
Moreover, what are you (OP) trying to get out of this? Is she financing it to you? How does her carrying a loan help you if you are not the buyer?
From this vantage point right now I don't see any reason for this seller financing to even be explored. It looks like we are talking about Seller finance to simply make grandma's life more complicated than it needs to be which is not a good idea.
Let's not finance things for the sake of doing something we have not done. Let's finance things to serve a need. I don't understand or see a need here with the limited post information.
- 10yRoy N.Pro MemberRental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
Originally posted by @Aaron Mazzrillo:
Grandma, I'd like you to carry the paper. (That is generally how older folks refer to it.)
Here is why:
Let's say you need $200/month to live. If I pay you $20,000 for your house, you put that money in the bank and collect .01% interest. Every month you go down and take out your $200. In 101 months from now, you're cutting coupons for Alpo and standing in line at the grocery store pretending you have a dog just so you have something to eat for dinner.
Now let's say you carry the paper. If I pay you 5% on your $20,000 and we do it over a 10 year period, You collect $212.13 every month for the next 10 years. That means you get to eat your Raisin Bran, Quaker Oats, prunes, bread pudding, meatloaf, green bean casserole, fruit cocktail and still have $12.13 extra every month to save for a trip to Cracker Barrel or buy some hard candy. But just between you and me grandma, and as much as I love you, if you're still walking the planet in 10 years, I'm going to take you to the top of the basement stairs and give you a little nudge. I mean, nobody, absolutely NOBODY in the family expects you to last more than 6. Uncle Rico even went in on 4 years!
So, what do you think grandma, sound like a good plan?
Aaron:
Glad to see you back.
- Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes10y
Reasons for her holding the note: 1) She may not qualify for much of that $250K tax exemption, anyway, as it was partially rented, so may have to pay some hefty capital gains taxes on a direct sale, where holding the note would spread out the taxes over the years (not an accountant so you'd have to talk to one about it); 2) if good relationship, her kids might love keeping it in the family versus selling to outsiders and could help set up a trust for the funds to go through so she gets them while she's alive but automatically transfers to trust if she passes. 3)even if she doesn't need the money, having the extra monthly income is definitely a plus. 4) she doesn't have to fix anything up as you'll take it over as-is 5) no dealing with agents, inexperienced buyers, showings, basically all the things that drive one crazy when selling their home, and 6) feeling like she's helping her grandson:)
- Investor · Cambridge, MA · Member since 2013 · 264 posts · 104 votes10y
Glad your not Uncle Dion @Dion DePaoli ---> Your post makes sense - I was hoping to see some responses like that when I posted.
Grandma will be renting next. As mentioned Grandma doesn't need cash (which I still on planning putting a nice chunk down) or the monthly income (which she will get) - she needs a smaller place in which needs no maintenance like a 1BR Lux Apartment.
My goal is not to confuse or stress her - thus why I brought this to BP b4 her.
What I imagined can be stressful is her hiring an agent - having the agent tell her all the repairs she NEEDS to do to get full market value - going thru 100 showings / offers / then closing ect. Thought it may be better just to deal with me her eldest and favorite grandchild.
On my end I saw potential to Aquire the house below market value - with low $ down and a fair interest rate - again without the hastels of financing thru and bank and having another mortgage on the balance sheet. Many to the points @Lynn McGeein Posted.
Not looking to break the family up just trying to solve two needs; help grandma downsize and add more units to my portfolio.
- Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes10y
Originally posted by @Roy N.:
Originally posted by @Aaron Mazzrillo:
Grandma, I'd like you to carry the paper. (That is generally how older folks refer to it.)
Aaron:Glad to see you back.
Thanks Roy! Good to be back.
- 10yDion DePaoliPro MemberReal Estate Broker · Northwest Indiana, IN · Member since 2011 · 2k+ posts · 2k+ votes
@Jim Sestito
So some rehash and thoughts of the talking points:
1. You are grandson
2. Grandma needs a place with less maintenance demands
3. Grandma does not need the cash per se
4. You can put capital down but it wasn't clear what number might be ($10k or $200k?)
So, it is not clear what grandma's estate plan is. If she is 80, there is probably something in place which deals with the property. It's not clear your plan matches the estate plan or the will of her beneficiaries or the future executor of her estate. Those are some pretty big elephants in the room.
That detail matters as typically beneficiaries do not simply say they will take $0 from an estate. So one of your parents and aunts or uncles or many could be looking at the estate thinking sooner or later a pay day comes from the $350k +/- liquidation of the estate.
As you rightfully identified the note likely out runs grandma, unless of course you can manage a 10 year term which didn't sound like your plan. (obviously depends on grandma's timeline too) The note would flow into grandma's estate and be subject to the will's directions to the beneficiaries. Unless the note is made with a specific short term or a specific call option the executor of the estate wouldn't be able to force you to pay the loan off until maturity. That also means the flip side is true, a wise beneficiary may raise a stink about not being able to call that note due upon grandma's passing and a liquidation of the estate. It could also be the beneficiaries can work out a deal with each other or through the will that loan payments split to all or one. Views on that can vary. $100k loan is worth a $100k in principal but more than than in interest.
So, at this point, you likely have a bigger issue with everyone else (grandma's kids) in regards to your plan to pursue seller financing. That doesn't mean it is insurmountable but rather it needs to be addressed and disclosed to find a solution. To that regard, I think trying to structure Seller Finance that is a win-win-win without those considerations may just cause more trouble than needed.
If you can flush some of that out, then you can actually start to make a structure that make sense. For instance, if you have enough cash, maybe you buy grandma's new place and swap. Perhaps she takes the new place in full and you join title on the duplex. Notice there you now have 2 pieces of grandma's estate which might make it easy to get the deal approved. Aunt Betty will take the new place title from the estate and Uncle Larry get's the other half of the duplex. Maybe that works because Uncle Larry is happy with a pro-ration of the rents for his share over time and Aunt Betty really likes condos or something. Also, grandma along with grandma's estate is not burden with rent.
So the point is, there are likely more ways to make a deal hear than the linear Seller Finance approach. In addition, I would think devising a structure to meet grandma's estate needs along with recognizing desires and wants from the beneficiaries is probably the only way to get approval and not make it seem like you are trying to pivot yourself into a one sided deal. - Real Estate Agent · Kitchener-Waterloo-Cambridge, Ontario · Member since 2013 · 408 posts · 90 votes10y
Originally posted by @Jim Sestito:
Hello BP,
Dear Grandma is looking to downsize. Her house completely paid for and she has one note on it that she used to purchase a car with a about $18K remaining.
The house is a two family. The main unit is a 3 bed 2 bath (she lives in this one) and the apartment off the side is a 1 bed 1 bath (Just became vacant Jan 1). The house has a nice yard and a separate garage spot for each unit. Both units need updating to get full market rent for the area but are currently very livable.
Roughly $370,000 ARV --- Needs about $20K to get there.
Grandma is about 80 years old and financially secure.
I somewhat understand seller financing from the podcasts and various BP searchers. But I would like to hear the best quick Grandma elevator pitches for this situation.
Why would this be beneficial for her? Why is this beneficial for me?
If any needs more info please let me know. Hoping this will be a fun thread!
Best -- Jim
I think the best solution for grandma would be to sell her property and purchase a small condo and use the excess cash to purchase a managed rental property to supplement her living expenses. If she was to seller finance the property I would wonder how she will get the money to live somewhere? Unless of course she gets a HELOC first.
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes10y
Public forums and stories, oh well....
Dion and Lynn had some good points.
Specific advice, good advice cannot be given here, unless you spill the beans about grandma's personal finances on the internet.
Things to consider:
She is 80 so that means she is on Medicare. She could have a stroke next week and not die, but need long term care! That will blaze through most anyone's assets in a short period of time. Saying she is financially secure is an opinion, probably based on how she lives now, not looking at all contingencies.
Two areas of estate planning, what if I live and what if I die, those are the certainties!
Does she need note income to live on?
Taxes while living, gains on the sale are deferred while earning interest as interest income.
That's usually the best option unless someone actually needs cash, it's the opportunity cost. What would she do with cash?
Back to Medicare. If she goes to a nursing home, her rent just went up. Before she can qualify for benefits she must spend her money, including the valuation of her assets on her care until she has no more than $999.00.
A note is personal property. The note is not an exempt asset, such as her primary residence, 1 car, wedding ring, etc. The note will have a determination of value and that amount will need to pay for her care before she qualifies.
The note payment will not be enough to pay her bills, I can assure you and that note will need to be sold to provide a market value transaction with cash to pay down the cost of her care.
"Market value" some states attempt to use the balance outstanding as the value, which really messes over applicants, the valuation needs to be at the market value of her assets.
To have a marketable note to get a market value, the contract must be valid, legal purpose, be made at arm's length.......what????? Arms's length? Yes, and that can be hard to show when the borrower is related, the property was sold under it's market value and in light of the fact your ability to pay the obligation is not shown or demonstrated. It's a note between family members, where is the accounting of payments made as agreed?
There have been instances where notes were not marketable and therefore no market value could be assigned, meaning the note is an exempt asset for the determination of benefits.
Some other issues, any property transfers over a 7 year period can be brought back into the asset determination analysis. Another issue is that doing estate planning for the purpose of qualifying for benefits is illegal.
So, care, prudence and estate planning techniques must be used in devising a note for an elderly person.
A warning to all investors: When you approach any seller and you devise some seller financed proposal and that seller is not considered to be financially astute or qualified to evaluate the proposal and you pull it off, you're responsible for what you dream up. And if you're not aware of the consequences you cause someone else because of your unawareness, it can come back and bite you. Ignorance is no excuse. Dealing with an elderly person requires more attention as they will be seen almost like an endangered species in court.
As mentioned, you mess up granny and you can be the family dog for a long time.
As to any Trust, the property should be set aside into a Trust and then sold with the Trust financing it, not grandma.
If she has an estate problem, with taxes, an Irrevocable Charitable Remainder Trust might be an option and it can sell the property, other Trust arrangements can also be done, if she really needs a Trust, only a competent attorney can establish that, so you need to see one.
Notes can also be assigned through the estate or by agreement in the note as co-beneficiaries. It might be better to assign the note interests to heirs under the gift tax provisions until the note is fully assigned. This is not a DIY thing to do.
And, you also have the option of her assigning the property to a tenants in common ownership with you and the heirs with a "TIC Agreement" allowing you to purchase the property from other owners. This can be a good way to dilute her assets in the event of her assets being assessed for any purpose. With this being family, it would be my first option.
Now, on with the fish stories.....LOL :)
- Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes10y
So awesome to see so many people electing themselves to be the voice of 80 year old women every where. I stand up and applaud you. I guess when you're all 80, you'll know that you'll be dead soon so you won't want to make any long term plans. Wake up, check the pulse and go eat your wheat germ. Maybe a game of bingo after lunch... if you live that long.
Maybe we should tell 80 year olds they can't get 30 year mortgages cuz there is no way they'll live long enough to pay them off?
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes10y
I don't think the sarcasm really plays in reality. Most older folks should be setting up their affairs (actually everyone 'cause you don't know what can happen) and the issues I mentioned should be addressed. 2 sure things, taxes and death. I don't mind dying but I do mind paying more taxes than I absolutely have to.....or my heirs have to. That also needs to be accomplished cost effectively as well.
I did a 30 year fixed rate loan to a 92 year old man, not a problem. As a borrower, mortgages aren't really an estate issue, assets are. I don't even know anyone who eats wheat germ or who plays bingo to my knowledge, I know several who like to fish and tell lies....LOL :)
- Investor · Cambridge, MA · Member since 2013 · 264 posts · 104 votes10y
@Samuel Sedore If grandma needed investment advice I would tell her to come on BP and make an account. But she doesn't want investment advice, I do. No more owning - no more landlording - yes to luxury one bedroom apartment on the first floor.
@Bill Gulley - OK Bill - sorry for the personal touch but hey I thought it was better than posting - Hey Biggerpockets - even tho you guys talk about it all the time I still don't 100% get seller financing..... Fact is I get the concept of seller financing in a big picture. I just wanted to see if this situation was a possible use case.
I also wanted to see some seller financing PITCHES - where is the pitch?! Take grandma out of the scenario if you need - how do you approach someone and ask if they will consider SF and make it sound sexy and show them how both sides are winning!?
Here is how my thinking started - My grandmother (we have a great relationship btw) has this monster two family - it needs a ton of work - she doesn't want to do it - she doesn't want to be a landlord anymore. Now either she is going to go out find a contractor pay him $$$$ to fix it up --- find an agent --- have a 1000 showings to try to get top dollar. Or you sell below market value to one us fancy bigger pocket reading real estate investors who are willing to do the work bc this house has a great ARV and will rent for $3,500 / mo.
My thinking was how can I be THAT INVESTOR in this situation. Get gram the hell out of the big house she doesn't want to be in - and add a property to my portfolio.
@Aaron Mazzrillo Thank you for recognizing the LARGE QUANTITY of Grandma real estate advice on here.
- Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes10y
Originally posted by @Bill Gulley:
I don't think the sarcasm really plays in reality. Most older folks should be setting up their affairs (actually everyone 'cause you don't know what can happen) and the issues I mentioned should be addressed. 2 sure things, taxes and death. I don't mind dying but I do mind paying more taxes than I absolutely have to.....or my heirs have to. That also needs to be accomplished cost effectively as well.
I did a 30 year fixed rate loan to a 92 year old man, not a problem. As a borrower, mortgages aren't really an estate issue, assets are. I don't even know anyone who eats wheat germ or who plays bingo to my knowledge, I know several who like to fish and tell lies....LOL :)
But I really did catch a fish this big!!
My point was/is that we all like to assume we know what is best for someone else in any particular situation, but we really don't. People's motivation for doing stuff is often incongruent with what we think they should be doing. A friend of mine did a deal with 2 fellas; a young guy in his 30s and and another guy in his late 70s. The three were partners on a deal and decided it was time to split it up. The managing partner gave the young guy a 30 year note and the older guy cash, for obvious reasons. Next time he saw the older guy he noticed he wasn't very talkative. When pressed for info, he said he was really upset that he didn't get the note out of the deal.
What we think other people need is really never up to us to decide.
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