I think the easiest way is for Grandma to get the loan herself. I know how the elderly think and my mom would say NO WAY ! But that would be the easiest. Also, since she gets her homestead exemption on the sale price… um there would be no taxes to her on the sale at any price. She could then just pay you each on the profit as contractors. No partnerships, less hassles. You could submit a Contractor’s bid to rehab the property and put together a formal plan with resale price, time to rehab, etc. She just pays you. You and she both, would be protected with a Repair contract, just like a regular contractor. If you don’t perform, you don’t get paid. She pays out money from the loan as funds are needed, so she will feel safer. The tax to you would be the same, and you wouldn’t have to form a partnership, file additional taxes, etc.
Can anyone answer my previous post please. I need some information from anyone and this is the 3rd time I posted it. I know it is pretty simple for most but I would like to understand the process being this would be my first deal and wording and paperwork is everything!!!
Posted by
Cassie on May 18, 2000 at 09:04:18:
My girlfriends grandmother’s house is free and clear. We want to buy the house but we want to pay the grandmother after we rehab and retail. She is willing to wait for us to do this but we need the forms to protect everyone involved. We have to have interest in the property to get a rehab loan so how can we do this? Do we get her to Quit Claim Deed the house to us than apply for a equity line? Or is there a form out there that would give us the interest we need to do a rehab project on the house than sell it and pay her? If she deeds the house to us how does she protect herself in case we don’t perform as agreed(which isn’t going to happen). Can we just get her to deed the house, offer a purchase agreement to her, get the rehab loan and rehab, sell and than pay her? I guess my girlfriend and I need to enter into a limited partnership?
This would be our first deal and we want to present this to her grandmother knowing what we are talking about.
I think she will go for it if she is protected.
I look forward to all replies,
Thanks to everyone
Re: CAN ANYONE ANSWER MY PREVIOUS POST? - Posted by Bill K. - FL
Posted by Bill K. - FL on May 19, 2000 at 17:00:36:
What about having grandma put you and your girlfriend on the deed, then get the rehab loan, rehab, sell and split profit as previously agreed upon. The three of you would be tenants in common. Now if she happens to kick the bucket in the meantime and has no heirs except for your girlfriend – oh well. Don’t get any ideas now.
Posted by JohnWe (NoCA) on May 19, 2000 at 15:47:46:
Grandma can get a performance mortgage on the house after she deeds it to you. A performance mortgage is similar to a normal mortgage, except there’s no money that’s owed – just performance of a specific task. In your case it would be the satisfactory rehab of the house. If you don’t do the rehab, or don’t do it the way Grandma likes it, she can foreclose on you just like any other mortgage where there is a default in payment.
Agree on the total price you will pay. Have her carry a note for that amount due in 1 year. Have her agree to subordinate that note to a new loan you will obtain to pay for the repairs. She will be in second position. After you have rehabed the property sell it and pay everyone off, you keep the difference as your profit.
