Posted by John Corey on March 16, 2006 at 01:17:05:
SW,
Yes, I do take on new investors so if you want to discuss further lets take the discussion off-line. Send me an email. john.corey@gmail.com will work.
John Corey
To buy or not to buy - Posted by Jon
Posted by Jon on March 14, 2006 at 20:28:26:
I am 20% owner of deceased parent’s house appraised at 60K.
A nephew wants to buy my siblings and me out for 56K, but has not come up with financing yet. I seem to be the only one with the inclination or ability to buy it, and could buy house for 45K and rent to my nephew giving him an option to buy later. Is this a good deal for me or should I either wait for him to finance or force the sale and bank my 11K inheritance? I had planned to bank that money @ 4% and just keep it as a security fund. Assuming debt svc. including taxes and insurance of $450-$470, how much rent should I charge to cash flow this?
Re: To buy or not to buy - Posted by Walt
Posted by Walt on March 15, 2006 at 16:21:47:
Anyone that I know that has done business with a relative has always got burned.
Run away while you still can.
Re: To buy or not to buy - Posted by John Corey
Posted by John Corey on March 15, 2006 at 02:04:52:
Two perspectives.
If the alternative investment is going to produce a return of 4% you can easily figure out what might happen if you were to buy the property. I suspect the property will return more if the deal is structured correctly.
You need to look at your liquid reserves and if you will need the cash for something else.
The other item to consider is the family dynamics. Would you really kick your nephew out if he failed to pay the bills? What is something happens to his health? If you would not evict then you would have an investment that pays nothing and is a source of annoyance.
BTW - If you really trust your nephew to pay the rent and maybe buy an option you could just sell the place to him and write the loan yourself. You get some financing from a bank to buy out your relatives and then sell the property with a land contract or with a wrap mortgage. This way you are not legally responsible for maintenance and can not be sued as an owner when someone falls on the steps, etc.
John Corey
PS. A benchmark. I work with other investors who earn 15% by lending out their cash. The loans are 65% LTV, 1st position liens on real estate. The loans pay off in 12 months or less. Hence the 4% you are expecting from the bank is not that great.
Re: To buy or not to buy - Posted by SW
Posted by SW on March 15, 2006 at 13:09:23:
“PS. A benchmark. I work with other investors who earn 15% by lending out their cash. The loans are 65% LTV, 1st position liens on real estate. The loans pay off in 12 months or less. Hence the 4% you are expecting from the bank is not that great.”
John, this sounds interesting, are you looking for new investors?