Posted by Bill Gatten on April 20, 2000 at 13:14:26:
How might she feel if she knew she didn’t have to transfer the title to you, OR give you an Option per se? And how would you fare if you could offer your incoming tenants the entire income tax deduction at once (along with all the other incidents and benefits of ownership…equity build-up, appreciation, use, occupancy, etc.)?
Consider putting the property into a title-holding trust in HER name; then just taking a beneficiary interest in that trust, along with an agreement to sell or refinance in, say 3 or 4 years (keeping all sums over and above today?s FMV and all sums applied to loan principal). Then at the end you could share the proceeds of sale with your co-beneficiary tenant (who, by the way, paid all of your closing costs at inception, all the monthly payments, and handled all expenses relative to management and maintenance costs along the way…while paying a positive cash flow to you). You agree of a value today of, say $330,000.
Your ad (for your tenant) then says: “No Bank Qual, No Down, 3 pmts and clsg costs moves you in. 4+3 w/pool. Brnd new $450K Home, only $3200 p/mo + tx & ins…”
When they call, you merely say: “…if you can afford the closing costs and monthly payments, I’ll just GIVE you the property: all I want out of it to have you sell it or refinance in a couple years, and if there’s been any appreciation, I’d like to split it with you.”
A little something to think about.