Investor · Cambridge, MA · Member since 2013 · 264 posts · 104 votes
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!
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?
Yes Aaron, I agree, I don't presume to know what grandma needs, but pointing out that dealing with the elderly has more hooks on the line to get snagged by.
I believe you really did catch that fish, it's that or you'd have think you pulled it out when the person taking the picture caught it, so I'll bite on that one. LOL :)
@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.
You are saying you are looking for a way to become owner of your grandmothers property but don't have the money to buy traditionally? Have her take out a HELOC to subsidize initial living costs o moving and then sign the property into your name and have her register herself as the primary note holder. You make the monthly payments she basically becomes the mortgage company.
How many properties do you own in your personal name?