Deceased family member property - Financing ideas needed

4 Replies

Hi all,

There are two properties that a deceased investor left to his sisters and I would like to make an offer to purchase these properties and hold them as rentals. These two are both owned free and clear and the sisters just want to sell them and not continue renting them out since they live hours away and don't want to manage them. One of the sisters has already been talking to a realtor about selling but I'm not sure if there is a signed contract.

The properties rent for about $1300 and are in good condition. The value of the homes, from Zillow, are around $195,000 but seems a bit high.

I need ideas/help in any of these areas.

1. Any recommendations on how to get a contract for lower than market value? Since they have talked to a realtor, he may try to sway them to list the property and not go around him.

2. Any recommendations on financing ideas for the purchase with possibly with little to no money down? Maybe owner financing for with a balloon payment after 5-7 years.

3. I have never done owner financing so any recommendations on how to structure the deal so I can refinance after a few years.

4. Any other potential ideas/pitfalls would be nice.

Thank you for your time!


Welcome to BP.

You need to determine who the record owner is on the properties in order to know if they are pre-probate filings, currently in probate, or post-dustribution and owned by the sisters per deeds or court orders in county records. This will help you know what you are dealing with prior to making an offer.

Thank you Rick!  I checked with the recorders office and the person I am in contact with is now the legal owner.  It was in a living trust and now is in both sisters name.

Well, paying anything near $195K for $1300 in rent is a non-starter for having any cash flow.  You'll be seriously in the red if you do buy these, especially with high leverage (i.e., little money down.)

As far as owner financing on a free and clear property, its a piece of cake.  There's some paperwork, but the seller is playing the role of the lender.  They make a loan to you to make the purchase.  You borrow the money and use it to pay the seller.  Because the lender and the seller are the same person, no money actually changes hands.  Do the transaction with a title company, get an attorney to be sure you're using the right documents and they're filled out correctly, and use a servicing company to handle the payments.

As far as terms, that's whatever you can negotiate.  Do realize that because they have inherited the property one of the big advantages goes away.  A case you can make to the seller of a property is the tax burden on the capital gains can be spread out with an installment sale.  Because of the stepped up basis these sisters have on this property, that doesn't apply.

That is great insight Jon.  Thank you very much!  What price do you think would be advantageous to purse? 

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