Posted by Bill Gatten on November 20, 1998 at 10:31:00:
The answer: Because I want a vacation home (hypothetically in this case,) without needing to qualify for a loan, or come up with any more money or monthly payments. $6,700 and no payments…EVER… is a pretty good deal isn’t it (assuming the property is worth a hoot).
Another part of my motive in this would be to keep the lady and her husband on the loan and in the property (1/2 time), so that I don’t have to work very hard or qualify for anything. After I’m in, if they flake out again, I merely foreclose (by default in the PACTrust) and THEN assume the payment stream and the entire property (but I still don’t have to make any payments … see below).
In the meantime, I’ve been a good guy; gave them the benefit of the doubt; bought at least $10,000 worth of existing equity for $6,700; and left her and her husband on the deal to make the payments and take care of maintenance, repair, upkeep, taxes, insurance, etc., made an old couple happy; etc.
However, when (if) they screwed up again (those sweet old folks) and I ended up with the payment obligation, then I’d merely put an ad in the paper that says “NO BANK QUALIFYING, AND AS LITTLE AS $10,000 CAN MOVE YOU IN. CALL ABOUT GORGEOUS VACATION PROPERTY. 3BR, 2BTH. ONLY $_____ PER MONTH. INQUIRE ABOUT INCREDIBLE TRUST PROPERTY OPPORTUNITY.”
Then when they call, I’ll say, “Well… I have this very nice property which is worth about $------, and if you can afford the payments, I’ll just give it to you! All I want out of it is, in say, 3-4 years, I would like you to refinance it in your own name, and at that time give me back the equity that I have in it now. And, of course, if there is any appreciation over that period of time, I’ll split it with you.”
Note that at this point, I now have my $6,700 back (plus some extra) and all the equity and half of all remaining appreciation, equity build-up (principal reduction), etc. with no payments and no management or maintenace responsiblities.
And… if I still wanted to keep half of the vacation use, I’d perhaps lower the payments a bit, or decrease the amount of up front money required (nor not). I might just say, "… and… for doing all of this for you, I’d like to have the right to use of the property for, say, half the year, assuming you’re not there, of course).
John, a 50:50 time-share for $6,700 bucks ain’t a bad deal. One might even work out time share trade arrangements with a myriad of time share outfits across the world, and vacation for free anywhere you want… or rent it out one or two weeks at a time for the ?big rents.?
I didn’t do any of that with my Big Bear condo (the one I mentioned in my original post), but I could have if I’d chosen to.