Interesting Situation. Comments are appreciated.

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Interesting Situation. Comments are appreciated.

Jose De La Macorra
Dallas TX · Member since 2020 · 15 posts · 2 votes

I have an interesting/very uncommon situation I would love to get some comments on what you all think. While looking for properties I found an elderly man who has no family left. He never got married or had kids. He currently has Chronic Kidney Disease and although he is on Medicaid he needs money for his monthly expenses. His house is worth around 180-200k as of right now. He wants someone to pay him $1,200 per month until he passes away. He has said he can add me to his will and make it irrevocable or do an irrevocable transfer of death deed for his home and a 25k stock portfolio. He is currently 70 years old and as I said doesn't have the best health. He is very old school and does not want to do a reverse mortgage. Any Ideas? 

Thanks.

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John Teachout
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
5y

I think it would be nice to help the guy work through his situation but I would not agree to this deal. There's just too many ways this could go sideways. Some pharmaceutical company may have been working on a medication to reverse the kidney disease. He takes it and lives to age 96. Or he may die in a month and as others stated, people come out of the woodwork to lay claim to the house. Either have him sell it to you or someone else outright or pursue another solution.

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  • Jeremy Isaac
    Member since 2020 · 18 posts · 17 votes
    5y

    Did you ask him why he's not interested in a reverse mortgage? He seems like a prime candidate and this is essentially what he's asking you for. He may have applied and gotten rejected. Keep digging. 

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  • Jose De La Macorra
    OP
    Dallas TX · Member since 2020 · 15 posts · 2 votes
    5y

    @Jeremy Isaac

    He is an older New York guy who doesn’t believe in giving the house he’s been living for 30 years to a bank. I will keep doing my due diligence and keep digging.

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  • Jose De La Macorra
    OP
    Dallas TX · Member since 2020 · 15 posts · 2 votes
    5y

    @Shawn M.

    This older gentleman is trying to make a win win situation with someone so he doesn’t leave his home to a bank, so he doesn’t have to sell his house a move which is the last thing he wants to do. If he lives 10 years I get a house that will be worth $300k for $144k and be helping someone out, also would be getting a stock portfolio that now is worth 25k in 10 years could be doble at least.

    Of course I would keep doing my digging talking to a lawyer. I don’t see this situation as a “I hope this guy dies ASAP”, I see it as a win win. I am helping this guy and he wants to be helped and in return could be a great investment. Also $1,200 a month isn’t going to change my way of living a whole lot.

    Just some thought.

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  • Jason P.
    Investor · Bay Area · Member since 2020 · 42 posts · 19 votes
    5y

    @Jose De La Macorra

    If you pass shoot him my info. I’d help him out.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Pat L.:

    I'd want to seal the deal & write it up as a seller financed mortgage for $1200/month. Because you never know if Medicare Recoup could arise... we did exactly that with a very frail elderly couple who didn't want to move, but it's inevitable that one or both could end up in a nursing home. 

    "...Federal law requires the state to attempt to recover the long-term care benefits from a Medicaid recipient's estate after the recipient's death. If steps aren't taken to protect the Medicaid recipient's house, it may need to be sold to settle the claim...."

    YUP i had this happen on a life estate deal I did..  good advice Pat. 

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  • Benjamin Goodman
    Investor · Boston, MA · Member since 2018 · 45 posts · 31 votes
    5y

    @Jose De La Macorra the sooner he dies the more money you make...it’s just bad karma. Plenty of other deals to do...

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  • Jonathan R McLaughlin
    Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
    5y

    @Jose De La Macorra this is more common than people know in the context of estate planning. Look into "life estates." Like most things this could be one sided or mutually beneficial depending on how you approach it. Make sure he is represented by counsel as well.

    2Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    5y

    Cynical me says the guy is actually trying to swindle you. Why should the guy care if a bank gets it?

    However, as noted about, you could do a life estate. You agree on the purchase price of the house and the terms, and he gets to live there until he dies. My grandparents did this with their next door neighbor, who wanted to buy their house so he could expand his auto business. They ended up closing earlier and moving in with my mother, but if they had not then they got paid on the front end and would have lived there until both passed away. 

    Also as mentioned make sure both sides have independent counsel. You don't want to fight this out 10 years from now. And you will probably have to have some kind of minimum payment in there in order to have it stand up in court; it's unlikely a court is going to let you walk off with a 200k house for 6 grand if the guy kicks off in 5 months. 

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  • Bob NortonPro Member
    Accountant · Slidell, LA · Member since 2019 · 382 posts · 272 votes
    5y

    @Jose De La Macorra I don't think there is any such thing as an irrevocable will.  He could rewrite his will at any time and the one with you in it would be void.

    1Reply
  • Marian Smith
    Real Estate Investor · Williamson County, TX · Member since 2011 · 1k+ posts · 961 votes
    5y

    @Jose De La Macorra Maybe he could sell it to you owner finance and you give him a qualified life estate that is contingent on his paying the taxes and insurance. If he needs to move to assisted living you still pay him a mortgage. You really should talk to an estate type attorney because it seems there are minefields but it may be an opportunity for a win-win. I hope you are a good guy, and I hope I don't end up old, sick and alone.

    1Reply
  • Ronald RohdePro Member
    Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
    5y

    @Jose, I'd be happy to chat about some solutions. You can also consider a regular sale with a life estate.

    2Reply
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