So I made an offer on this house and during title search some issues came up. Ex husband wife had some quit claim deed transfer that never went through and now the ex husband has judgements against him. So anyway seemed like the deal was off but I was thinking, this might be a perfect lease type situation.
The owner, the wife, who has a mortgage on the place, lives out of state and doesn't want the place anymore.
I could lease it from her for lets say 2 years with an option to buy when the legal / title ownership is all in her name. I'm thinking she would want to cover her mortgage which is around $110 a month. Rent is $800. That gives me plenty of cashflow to save for potential repairs that might come up. So she gets her mortgage paid with the potential for future cashflow when it is paid off and I get the rest for taking the risk that the house needs repairs.
Sound like it's a doable deal?
Would I be responsible for the property taxes? I don't think so. I think that is on her name.
She would have insurance, would I need it also?
Maybe I would only need liability for my company?
I would have a property manager. I think I could make $400ish a month off of this deal.
I like it
I'm new but that sounds decent to me.
Do you have a follow up as to what direction you went with this?
I pitched the idea to her and she likes it. Next I am meeting with my lawyer to work out the kinks. Do I need to insure the house? If there is a claim does the owner submit it and I pay the deductible? What are the actual fixed costs? She is getting back to me.
You don't have to insure the house but you should get a cheap renters insurance to cover the interior. Her homeowners policy will cover the outside if something happens. We've had that happen on one of our deals. The roof caved in on a mud room, home owners insurance covered the exterior and the renters insurance covered damage to items on the interior.
Hope that helps,
Ok thanks that's great! Can you explain more about your lease sandwich?
My owner is stuck. The owner is out of state and can't sell for legal reasons with a co-owner on the title. So the owner really just doesn't want do deal with the house at all. I was going to buy it and that is how we all found out about these issues at the same time. So I have an open conversation with the owner. After some time passed and we felt like the deal was off because of the legal issues with the title, that is when I pitched the idea. The thought of off loading the capex and maintenance sounded good to the owner. So now the owner is going to get a title abstract and my lawyer is going to look it over to put together a lease with an option to buy. The option will have language around the legal issues and when they are resolved and the title is clear, that is when I would be able to buy.
The language I used was plain and spoke more to the arrangement. I said I had learned of a way that I could eliminate capex and management from the situation. Then I spoke about how I could lease with an option where the lease was for the fixed costs and I would get the cashflow so I could plan for fixes.