Is this a deal or not?
Hi Bp Community,
I am in need of some advice with a current deal I have in the works. The owner of this distressed DOUBLE LOT in a fantastic area and I have worked out negotiations and we have agreed upon a purchase price. Here are few things to note about this property. There is a demo that will definitely need to take place. There is a distressed home on one lot and an efficiency on the other. A few grandfather oaks that will need to be taken down with permits also (hopefully). I have been quoted that the demolition will cost about $10,800. After that I will need to have the double parcel surveyed and legally split into two separate parcels. The double lots already have separate meters and the two properties have somewhat different addresses. One is considered 102 and the other is 102 1/2, for example. Now interestingly I was able to get a good deal by ensuring the owner I would build my personal home on of the lots, which I'm excited to do. Here's where things got confusing for me, the owner would like me to open up a trust for the property and place both of our names as the overseers on that trust instead of paying him upfront. He stated that the trust would allow us both to have interest in the property while the demo is taking place and the two new homes are being constructed on the two lots. He then stated that once the second home has been built, we will payoff the note on my personal home and split the profits. Well the newly constructed homes in the area are going for $350K-$390K. It will cost me about $220K to construct both homes. What I am trying figure out is, what is the benefit of having the trust created? Because it seems that he will make the same amount of money either way. Does this protect me if anything should happen to owner before construction is completed? Does this mean I don't need to draw up a purchase contract because he is going to grant me interest in the property? Where do I get started with this project?
I really need guidance with this one. If you need more details please feel free to ask.
Thanks in advance BP.