Be careful for what you ask for. Retired couple wants out of REI

[Davon Lowery]

The heavens have opened up and threw me a deal.

As Brandon and Josh would say, if the people around don't know what you are doing (REI) then your not working hard enough (come ro think of it, it might've been them).

So, after about a year of promoting my business, recently, I was approached by a long time, trusted family contact (married retired couple) who are fed up with waiting for the market to correct upward and want out. 

The years of CapX and tenant issues have worn them out and they are ready to cut their losses.

They offered me an opportunity to "buy-into" 5 properties in their portfolio. I have always looked to them as roll models even before the Marshall Reddick days, often longing to live their lives was one of my aspirations growing up. 

They just barely survived the the crash of '06-'09 and have skated by on modest cashflow; but now enough is enough.

One caveat, the values are not really impressive and if I were to refi I would surely be negative; they have amazing rates on their mortgage in the low 3's.

So, the deal being discussed between us is I would pay for any repairs and other CapX issues that may arise and I will see my return when they sell the properties. It has already been agreed upon that I will go on title (either I or my biz) and I will have rights if anything should happen to them.

The problem I have is, I forsee them wanting to abandon REI as a whole, now I have 5 properties that may not conform to my portfolio, and not enough capital to buy them out.

They have sold properties in the past and have had to bring cash to close; I would hate to be in a refi situation and not have the capital to secure new financing and not having sufficient equity to sell should they decide to walk away.

Any thoughts?

[Thomas S.]

There is no logical reason to invest in these properties. Chances are you could end your investment future with this plan. Your problem is you are not thinking from a business perspective. You have no reasons to try and make a bad deal work. Offer to buy the properties for what they are really worth and let them decide. You have a chance to make a good purchase but the reality is if they want out they are going to have to take a loss.

They are the exact owners that we all want to profit from. Burned out landlords.