Chattanooga, TN · Member since 2017 · 21 posts · 1 vote
Has anyone ever created a partnership with a vacant home owner (my mothers 18 year boyfriend) where owner retains ownership of the property and the other person (me) acts as a property manager for renting and they split the profits.
Since he is not making any effort to sell and its been vacant/unused for two years I think it could be a good strategy to partner with him to rent and manage (maintenance...would have a realtor find tenant) the whole process so we both benefit. I get the benefit of passive income without the process of mortgaging a home and he gets the benefit of someone paying his monthly and yearly expenses (taxes, ins, HOA, etc.).
Rockledge, FL · Member since 2016 · 493 posts · 427 votes
8y
James,
Straight property management would work. You just take a bigger fee.
Does he want to sell, but doesn't want the hassle? Then do a master lease with option to purchase. If no sale, then just the master lease.
How about a straight up purchase? Or maybe he sells it to you, and holds the note for more passive income.
Basically, need to figure out why he's not doing anything with the property, then solve his problem. You make money by solving the other person's problem.
As far as not mortgaging the property, why not if it gets you more money? It's a bit of work and risk, but if you stand to make more for yourself and your family, while solving the BF's issue that's a real win - win in my book.
Chattanooga, TN · Member since 2017 · 21 posts · 1 vote
8y
Yeah I looked into purchasing it from him but he has the same mentality of many his age where he believes he should get the same value as other homes selling in the neighborhood just because he's in the same neighborhood and if not he'll just drag his feet. Its still furnished as well. The problem is that he has not done any updates since completion of the property in the 90's?? early 2000's?? and and all these other homes are updated (nicely I might add). I figured the next best thing is to see if I can give him some cashflow while at the same time giving me some cashflow without the hassle of trying to get him off his sale price that he will never get. Plus its easier to convince my wife to make a deal this way since there would me no risk on our part aside from dealing with tenants. Baby steps.
I can't do straight property management due to state licensure so that's why I was hoping I could bypass this by creating some form of partnership (50/50 or 60/40) where he retains the physical asset and I do the heavy lifting when needed.
Although the master lease agreement sounds interesting and could bypass all the above issues. A little more risk for the wife but not too bad. I've known the gentlemen for 18 years and the home has no mortgage so there is no risk of due-on-sale claus from a financial institution on his side. The only issue would be agreeing to a lease amount that would be reasonable since I know the hot water heater and HVAC units are 20 years old and I would have to repaint the whole interior and replace the carpeting. Logic for the most part is out the window so I'll have to work at convincing him of this.