Estate Settlement Lease/Option Opps? - Posted by Rich


#1

Posted by Rich on November 11, 1998 at 11:38:55:

Is it possible to lease/option from the estate. Do states require that the estate be liquided in ‘x’ amount of time? If I optioned it for one year, for example, offered to pay them their asking price, lease optioning for $1500 initial payment and $500 per month, with 100% going toward house payment (I have seen 100% lease options around here). I would have $7500 built up at the end of the year, to go toward downpayment, and they get their asking price.
In the first 2 months of leasing, I can make required improvements necessary to rent, (fire alarms, painting, etc. - approx $1,500) Begin sub-leasing for Sept. at $6,000 ($1200 x 5). By this time next year I’d have about $12,000 for downpayment, and would be good to go! And ready to collect another $6,000 on the first of the year. It sounds good on paper . . .how does it sound to you?
-Thanks. - Rich


#2

Estate Settlement Lease/Option Opps? - Posted by Rich

Posted by Rich on November 08, 1998 at 16:42:57:

Is there a good method for doing a L/O when the property is being sold to settle an estate? I’ve come across several instances, over the years, when a family wants to sell their deceased parents home. Usually there is no mortgage, and motivated sellers, but they want to cash out to settle the estate, and divide the proceeds. Is there a L/O approach that will satisfy this situation, when more than one seller is involved? Any ideas are welcome. - Rich


#3

Try a different tool - Posted by John Behle

Posted by John Behle on November 10, 1998 at 24:29:48:

A lease option can be hard to swing in an estate for a couple reasons. First - they usually need some cash to settle the debts of the estate. Second - the heirs usually want to split the assets and they have different needs. By the time the estate is settled sometimes they are no longer even talking to each other.

Paper might be just the tool. You could buy the property using seller financing. You can create different notes for the different heirs. For example, 3 heirs might each receive a note for 1/3 of the amount. They then have the ability to keep the note, sell it, trade it, give it to children, or whatever they want. A fourth note could even be structured to sell specifically to get the cash needed. A “partial” can work well in these cases also. See the post in the cash flow forum titled “Tall Tails” for an example of partials.


#4

Re: Estate Settlement Lease/Option Opps? - Posted by Irwin

Posted by Irwin on November 08, 1998 at 20:03:51:

You hit the nail on the head - the problem nail, that is. The probate sellers always want to cash out, but that’s what creates the bargain play for investors. The nature of the (estate) beast, requires cash. So if you can’t play for cash (your own anyway) try to lock up the best cash deal possible and then look for a financial partner, or a flip. If the deal is right, you should make money either way.


#5

Re: Estate Settlement Lease/Option Opps? - Posted by Rich

Posted by Rich on November 08, 1998 at 21:52:05:

I was just looking at a property this past week where this was the situation. The family is trying to sell a small five bedroom home on an acre parcel that is situated smack dab in the middle of an apartment complex. The house could be rented and the remaining land could be developed with an apartment building. It sits within 500 yards of a small university (students occupy most of the surrounding apartments). The property could probably be purchased for $60,000. The family is going the FSBO approach and are asking $67,000. The home isn’t in bad shape. $5000 would probably get it up to snuff. The acre is a nice rectangular piece of property. And still has an old horse stable on it. The house has a lot of potential as a rental, and the land for future development. Unfortunately, I’m cash poor, but if anybody wants to finance it, I do have about $60,000 in equity in 2 other properties. Thanks. - Rich


#6

Re: Estate Settlement Lease/Option Opps? - Posted by Bud Branstetter

Posted by Bud Branstetter on November 09, 1998 at 12:53:51:

Like Irwin says most estates want cash NOW. I recently offered the heirs of an estate to get them several thousand more buy helping them find a owner occupant. They would then sell the owner financed note. They would rather have the cash now rather that wait 2 or three months for 10% more.

You could look at doing a note and selling it to raise the cash if the value is there. Or try to find a buyer for the house only and keep the land for development. What is the FMV? Trade them notes on your properties and we’ll sell those and a note on their property to raise the cash. With five bedrooms how many students could you squeeze into the house. Income potential?

Maybe if you had it under contract you could flip it to the owners of the appartment complex. Recognizing an opportunity is only good if you are prepared to take the action to make it happen.


#7

Re: Estate Settlement Lease/Option Opps? - Posted by Rich

Posted by Rich on November 09, 1998 at 19:04:36:

I like the idea of doing a note…next question. How do I ‘do a note’? And how do I go about selling it? I’m new to this stuff. I own a couple of properties, and rent them out…no real creativity involved.
Properties in this area rent to students by the semester, $1200 per student, per semester is the going rate around the campus. You can only ‘squeeze’ what zoning will allow per square foot, and I believe you could get 5 students in the house.
I guess it would make sense to make an offer and get it under contract and hope I can find a developer…or financing.
Thanks. - Rich


#8

Re: Estate Settlement Lease/Option Opps? - Posted by Bud Branstetter

Posted by Bud Branstetter on November 10, 1998 at 13:05:04:

Let’s calculate. $1200/student5 bedrooms2 semesters=$12,000 a year or $1000 a month. Summers are extra. Sounds like enough cash flow potential. Next step get as good a contract as you can. Make sure all heirs need cash.