Sage advice. I won’t go into my situation with a little old lady who called me repeatedly to go look at her “chateau.”
I got it under contract and the next day (she shopped the contract) the adventure started and ended up with a letter from her attorney threatening to sue and the news people calling me because of the alledged “fraud” I perpetrated. I even had a special session with the BBB - they came down on my side and dismissed the complaint.
RUN AND DON’T LOOK BACK. Whatever deal you make with her won’t be worth the paper its written on.
I’ve got a deal in the works … maybe … if I can come to terms with a strange partner. She has a house in a high-end area that could sell for 600k by my estimates, at least. she claims the house next door sold for 700k last summer, which I am going to check on.
I know her personally because she screwed me for $175 on a landscaping deal (I own a landscaping company).
She tried for seven months to sell, dropping her price three times till it was asking at 450K, then she took it off the market. It’s a real fixer-upper among prime cherries in a wealthy area, she has 1.3 acres, two Italian-designer fireplaces, a huge Gunite pool, etc, but EVERYTHING is in need of repair.
I called her and asked informally if we could work something out where I would buy it with an investor and fix it up, asking her what she thought it would cost to fix up.
In the end, she asked me if SHE could be my partner! We worked out something (informaly still)where I’ll get a percentage of the after-repair sale price in exchange for general contracting the repairs.
Why does she need me? She’s a bit whacky for one thing, and needs a semi-live-in nurse as well. She says an electrician screwed her big-time, and she just doesn’t want to deal with the fix-up at all.
I’m looking to make 40k, but will allow her to negotiate me down somewhat.
OK, my question: What do y’all think? And how EXACTLY do I protect myself, seeing I know she’s shrewd and will screw me if at all possible?
If it helps, she owns the house outright, but has a ‘reverse mortgage’, whatever the hell that is. Thanks in advance.
Posted by DavePA on February 05, 2002 at 18:46:02:
Jim, a “reverse mortgage” or better known as: (RAM) “reverse annuity mortgage” is a type of mortgage designed for elderly homeowners with substantial Equity. Which a lender periodically (monthly) pays an amount to the borrower. The loan balance increases with interest and periodic payments, causing “negative amortization”. Hope that helps define the RAM for you. Good Luck, dave
Posted by Bashir on February 05, 2002 at 16:14:24:
If she will give you a low enough cash price, try to get an option on it and flip it. Tell her that you would be willing to help her sell it if she’d be open to your option.
Once you get your facts together, you may decide to take a hard loan out, and get it rehabbed yourself! She doesn’t have to be your partner to do a renovation! If you want the home, structure your deal where it would be difficult for her to screw you!
Re: advice on strange partner - Posted by Mark (WV)
Posted by Mark (WV) on February 05, 2002 at 11:18:40:
Why does she need me? She’s a bit whacky for one thing, and needs a semi-live-in nurse as well. She says an electrician screwed her big-time, and she just doesn’t want to deal with the fix-up at all.
Your words not mine,why does she need you ? She needs someone to fix it up, why would she do this ?She sees the potential for your profit and wants it for her self .!
She ownes it outright , not entirely true , she has the reverse morgage on it. She might have some disablity’s but it’s not hurting her mentally.Sounds like she has a plan don’t it ?
Re: advice on strange partner - Posted by Mark(OH)
Posted by Mark(OH) on February 05, 2002 at 10:25:59:
Why would you want to enter into a business venture with someone who has screwed you over before? My motto is “screw me once, shame on you, screw me twice shame on me!” Call me a hardnose but… you only get one chance with me! I’d run quickly from anything she proposes! Just my view…
The three responses previous to mine give excellent, well thought out advice. Please listen to them. Do not allow yourself to be swayed by this lady’s visions of a profitable real estate deal. She will only screw you again!!
Posted by GL(ON) on February 05, 2002 at 24:13:47:
Listen to Mark. He knows what he is talking about.
Never get in on a deal with someone you know is unreliable, crooked or a liar. No matter how good they make it sound, you will lose. It will never make a profit.
Even if it makes a profit you will never see it because they will never give you “their” money (as they see it).They will weasel out of it.
I bet if you knew it, YOU are one of the many people who tried to cheat her (according to her) and that is why she never paid you.
I wouldn’t walk on this deal, I’d run. I don’t work with partners who will rip me off if they get a chance. You need a lot more information to find out if there is even a deal here. You need an accurate market value and an accurate cost of repairs and you can’t take her word for it. To protect yourself, you could enter into a contractual agreement, but if she tries to renege, you’ll end up in court trying to make her pay. I’d hate to be the guy in court that is sueing an elderly woman, who by your own admission isn’t exactly mentally healthy and who is also physically in need of a nurse. It could be contested that she isn’t even mentally capable of entering into a legal contract and you could end up looking like a guy who is trying to take advantage of her. Again, I’d pass. Why walk into a situation that you know could have major problems? Slap a lien on her house for the $175 she owes you for the landscaping services so you’ll get paid when she does sell and move on.
Just my opinion,
Mark
Re: advice on strange partner - Posted by Brent_IL
Posted by Brent_IL on February 04, 2002 at 23:25:22:
She may have no equity in the house depending upon the nature of the reverse mortgage. A reverse mortgage means that someone or some entity is paying her money periodically, probably monthly. The payments are treated as a loan with the interest accruing. The loan is secured by the property. It’s most likely a first mortgage. Any old mortgages would have been rolled into the reverse.
This mortgage will have to be paid off when the property is sold.