Re: Buying Partial Interest First Time - Posted by JT-IN
Posted by JT-IN on August 05, 2007 at 13:21:30:
Yes, you need an Atty and Title Co to handle this transaction… You should NOT rely as an absolute, on anything you are told on a RE board, even what I or other experienced investors might tell you. Let the Title Co prepare the Deed along with an affidavit that the Grantor will sign… the affidavit will state that they agree to cooperate with title co in the event of any clerical errors, etc… Just small things, but items like this you aren’t likely to cover if doing this yourself. Well worth the cost for service, IMO.
70% is too much to pay for any partial interest… and especially when you are talking about a 1/5th interest. The more partial interests that exist, the higher transaction cost you will have, per interest. With a 1/5th interest I wouldn’t want to pay over 40%… 50% max. I would work on the easiest ones first, to what you perceive as the most difficult, with the last one being the occupant of the property.
Assuming you acquired 2, 3 or 4 of the interests, you can reasonably expect that the party occupying and benefiting from the property will reimburse you for the FMV of the rental usage of this property, if it goes to a partition action. If it would rent for 1000 per month, then each partial interest should be entitled to $ 200 per mo of reimbursement of rents from the party occupying the property. Since it is a working farm, the other question is… does she provide any economic benefit to the property by working the farm…? If so, maybe there is some offset required there that you might owe back to her… or she owes part of the farm income to all the others, but all is negotiable and arbitable in front of a judge or impartial referee.
You would best convince the occupant by acquiring all the other interests and then give her an education of the facts; nicely of course… She won’t believe you so plan on being prepared to enforce your position legally. This is why you can’t pay 70% for other interests… as there are going to be expenses most likely, and the time factor… this could take a while.
How you convince each of the others to sell is to offer a painless end to the matter for them, culminating with a bank check with their name on it. If there is some spite involved, where each of the interests might want to see justice and occupant dealt with, you can assure them that this will be part of the result of your action. This may be a motivator or it could be a spoiler, and just remember that blood is thicker than water, as they say… so stay above the fray as much as possible. Just deal with them individually, attempt to strike common interest and rapport, and let them know you will be swift and fair to deal with.
Just the way that I view things…