Posted by Randy on September 11, 2003 at 17:10:54:
If I?m not mistaken the bigger issue is the legal description of the property is a single structure having two addresses therefore need to be separated. I owned a twin home (identical in appearance to a luxury duplex but each ?Half? had its own legal description and were separate parcels for tax purposes. I would suggest checking out that aspect first, if separated what your really talking about is a wrap with each separate buyer responsible for their own taxes and insurance (escrowed or not).
If I own a duplex (not free and clear) I should be able to sell off each of the units if I choose to, correct? Now couldn’t I play the bank and hold private notes for each of the “buyers”? I guess where I really have questions is who would take care of things like taxes and insurance? Would I wrap that up into the payment. If I have conventional financing on the duplex presently, how would I sell off one of the units? I have heard of people doing something similar with business space but not really sure what to do in a residential situation…I appreciate the help
This is a legal question. I suggest you see an attorney.
Before you do that, you might want to see a psychiatrist. After reading Randy and Brent(IL), I think that would be appropriate.
If you talk to an attorney, you are talking about either a tenant in common arrangement or you are talking about doing a condominium conversion.
Before talking to either an attorney or a psychiatrist, you might want to talk to the city abouat the prospects of making it a condominium. And to the county about the propspects of splitting the property into two separate parcels, which then could be sold independently.
Good Investing*************Ron Starr**************
Posted by Brent_IL on September 12, 2003 at 01:03:19:
This is an ideal situation for an EHTrust® if you are absolutely certain that you want to do this. You will have to sell on a Contract-for-Deed, or the trust equivilent.
I?ve tried it a few times (not EHTrust®) and it never went as smoothly as I had hoped. I was trying to maximize profits while legally avoiding the condo conversion laws. My major drawback was that I had some kind of underlying obligations on all of the deals. I had to stay on top of things so I could have a shot at getting paid and, in turn, I could pay off the people I owed.
The first time I just had people in as tenants-in-common. It was a disaster. It went years over schedule. The TIC could not agree on anything. Taxes went unpaid. They fought over mowing the lawn and shoveling the snow. I was like a referee. It was here that I learned to use court actions as a negotiating tool.
The next time I decided to use a trust and split the beneficial interest. It was better, but I had yet to learn how to write comprehensive trustee instructions and good beneficiary agreements. More hassle than it was worth.
The last time was O.K. I told the first one to buy that she would get to pick her neighbors as long as approval was not unreasonably withheld. The first two got to approve the third, and so on. The last one was voted in by consensus. We organized an owner?s organization that met quarterly. Any two owners could call a special meeting if they had a problem. It meant that anyone desiring to be a nuisance had to talk another person into agreeing with him or her that a problem existed. There was a minor glitch when someone defaulted and the market for a replacement was not as strong as it would be for a SFH or a condo, and I didn?t want to rock the boat, harmony-wise. The original contract buyers had five years before the contract balance was due. I had long-term financing in place, but I wanted all of the CFD?s to come due at the same time so the cash would be available to pay off the underlying loans. After two months I found someone who agreed to the shorter-term balloon call. All comtracted buyers paid when their notes where due.
I can say that I learned much from these experiences, but in retrospect, I could have flipped 60 contracts in the same period of time with a lot less aggravation and a whole lot more profit.
I guess the reason for this rambling post is to say that what you are contemplating is doable and may be profitable, but it will come with a price tag attached. It is no simple matter unless you are being cashed out and can walk away forever without any further contact with your buyers.
