Looking to buy 2 Properties from Family; Where do/can I start?

Question

Hello! I am a new investor and was approached by 2 family members letting me know that they were interested in selling their properties. One of the sellers has a tenant in the property already, making it the first priority out of the two. I am looking for some creative ways to obtain the property where I can possibly cut some of the costs by doing it "under the table" opposed to working the deal the traditional route. Open to any suggestions as this is my first experience! Thanks everyone!

Thomas S. · Answer

Family or not hire yourself a appraiser and inspector before you go ahead on any deal. If you are not experienced hire people that are.

The value your family members place on their properties may not be realistic.

Figure out what price you need, not them, to make the deal work and offer accordingly. If you do not know how to determine what to pay for a property to make it a good deal you are not ready to invest and should pass if they are in a hurry to sell.

Jordan Moorhead · Answer

You'll be able to avoid Realtor fees pretty easy which is 6%. Just call a lender and a title company and you should be good to go.

They could also seller finance the deals.

Jon Holdman · Answer

The downside to a family deal is that there are a lot of ways for those involved to get their feelings hurt. As a buyer, you want the lowest possible price, even if that means the seller gets less than they really could have. As a seller, they want the highest possible price, even if that means the buyer overpays. With a normal transaction everything is at arms length and both parties can do whatever they want to press their own viewpoint. If the two parties end up being mad at each other, either before or after the closing, so be it. With a family transaction the family dynamics come into play.

Even if you agree on a price, if it turns out that you sell them five or ten years from now for a nice profit, is someone going to think you own them a piece of that? Is someone going to think they did you a favor selling you these houses?

If by "creative" you mean some sort of seller finance, they things are even more complex. Now you have the potential of someone thinking they not only did you a favor by selling you the properties, they did you a second favor by lending you money.

I would come up with a process for determining value, first. Best would be to do three appraisals and use the middle one. Or the average. But even just saying "we will use the zillow value" would be better than guessing. At least that's independent. Then, buy the properties with a normal transaction. Get a loan, make a down payment, close at a title company. Agree that its a done deal. Win, lose, or draw in the future, whatever happens is your problem or prize and the seller has no claim no matter what. And realize that there may well be hurt feelings no matter what.

Ariel Smith · Answer

@Jamal A Blackwell Congrats on finding this opportunity! Yes as others have said you can avoid realtor fees if you are able to negotiate the deal yourself. I actually have a great connection for title in San Diego I can set you up with. He's a former very successful Realtor as well so he knows the whole sales process in and out and will be able to help you out with answering questions. I'll PM you!

Looking to buy 2 Properties from Family; Where do/can I start?

Looking to buy 2 Properties from Family; Where do/can I start?

Most Popular Reply

7 Replies