So I went to an Estate Sale Today....

Investor · McKinney, TX · Member since 2009 · 405 posts · 160 votes

Wife picked up a small item, I went after a little bigger item - the RE!

Can't say too much about the deal yet since nothing has been put on paper yet. Meeting with seller tomorrow to discuss the details. It's a bit complicated, would involve renting the property until an event occurs at which time I would purchase at a pre-determined price.

If we come to agreement, it will take some time to get everything drawn up properly to protect all parties.

This may just be the one I've been waiting for!

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Jon Klaus

Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes

15y

Sounds great, Kevin. You'll want to make sure you execute a legal option and that it gets recorded.

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Greg P.
Los Angeles, CA · Member since 2009 · 717 posts · 50 votes
15y
Awesome. Good luck! Think Win-Win!
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Account Closed
Atlanta, GA · Member since 2011 · 64 posts · 4 votes
15y
Good Luck.
Keep us posted.
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Darryl Brown
Houston, TX · Member since 2009 · 14 posts · 1 vote
15y
Great Job and Good Luck!!
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Kevin C.
OP
Investor · McKinney, TX · Member since 2009 · 405 posts · 160 votes
15y
Handshake deal at this point.

Seller will be leasing me a property for a very low sum until the owner passes. Once owner passes I'll have first rights to buy property.

Property is a home on 4 acres with a nice metal workshop (1300+s qr ft).

The rental price to me will be in the $500 a month range, once the lease begins, I can re-lease or do whatever with the property.

My intention is to use the shop and update the home so my son and his family can move into the place.

In the future, I may build another home on the property for income.

Acreage is in a very desirable area - neighboring homes range up to million+.

We live less than a mile from the property - very convenient for us.

The at some point to be owners are 'don't wanters'. A few questions while at the estate sale brought this deal together. Pretty sure the estate sale was only advertised with signs placed in the area, it was not advertised that the property might be available.

Perfect example of if you don't ask you'll never know. Only reason I even knew of the sale is because we live in the area. Only reason the RE deal is happening is because I expressed interest in it and asked the right questions.

Paper work will started tomorrow.

This looks to be the deal I'd been looking for! It's not a done deal until paperwork is drawn up and signed, at this point it's still a handshake deal.

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Jon Klaus
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
15y
Sounds great, Kevin. You'll want to make sure you execute a legal option and that it gets recorded.
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Kevin C.
OP
Investor · McKinney, TX · Member since 2009 · 405 posts · 160 votes
15y
I'll be getting a draft of the document from the sellers attorney, then I'll get my attorney to review it to make sure everything is as it should be.

Could be a few months, could be a few years, but once I'm able to execute the purchase there will be quite a bit of equity there already.

There's a vacant 2 acre lot a couple parcels over that is listed for $275K. That one is a creek lot, so it's a nicer piece of land. I'll be all in for less than $275K, and that's with a house, a nice metal shop and 4 acres. $100K+ per acre is not unusual in the area.

The fact that the property can't be sold straight up right now limits the potential buyers.

I can wait, and while I wait my son and his family can use the home on the cheap. The shop is icing on the cake.
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Greg P.
Los Angeles, CA · Member since 2009 · 717 posts · 50 votes
15y
Sounds like a awesome deal. Congrats and make it happen!
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Sharad M.Pro Member
Carlsbad, CA · Member since 2010 · 1k+ posts · 1k+ votes
15y
Kevin,

Congratulations! I hope everything works out for you and your family. Keep us updated.
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Kevin C.
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Investor · McKinney, TX · Member since 2009 · 405 posts · 160 votes
15y
The more I research this, the more concerns that pop up.

Has anyone here had experience with a deal like this.

Home is owned free of debt.
Owner of home is in their later 80's, has numerous medical issues and is admitted to nursing home.
Son and Daughter with power of attorney wish to dispose of home on death of owner (their parent).
All siblings are in agreement and wish to dispose of home upon parents death.
Per Son, home is homestead and cannot be taken by state to pay for medical care (not sure if this is true, will have to check with an attorney).
Per Son, all medical care for parent (property owner) will be paid by him as incurred.
One parent has already passed, once this parent entered nursing home, home became vacant.
Son states that they are allowed to lease home until parent passes but cannot profit from the lease.
Home is being offered under a 'maintenance lease' - lease being for no more than cost of maintenance on home.
Lease would stipulate that any maintenance costs incurred during the lease would be charged to tenant.
Upon death of parent, lease holder would be given first right of refusal to buy property at price that had been agreed upon when lease was initiated.

Now the questions.
Has anyone ever heard of this (this is in TX).

I can see several issues:
What if siblings borrow on the property?
What if siblings don't pay taxes on the property?
What if siblings become involved in a lawsuit involving property?
What if one or all of the siblings pass before parent does?

I'm curious as to how the initial draft will look that is supposed to be forwarded to me tomorrow and if it will address all the above concerns.

While this has the potential to be a really good deal, it looks like it also has the potential to turn into a huge can of worms.

A few potential downsides:
Any major 'maintenance' issue would be the tenants responsibility, that could be huge.
Anything that clouds the title would be an issue.
Seems like there would be nothing keeping the siblings from borrowing against property.

The only potential upside:
Parent passes and a clean sale occurs.
That's the only good outcome - anything less could be a major mess.

Any insight from anyone that may have knowledge of a deal such as this would be greatly appreciated.
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Kevin C.
OP
Investor · McKinney, TX · Member since 2009 · 405 posts · 160 votes
15y
After more research and discussion with wife, I see no reason son can't sell the property outright.

If son is paying medical bills anyway, Medicaid (if parent is on that) would have no claim.

I know you can't transfer assets or hide assets in order for an estate to avoid paying any debt it may have, but you can sure sell an asset - and per son, there is no debt anyway.

I'm thinking maybe the son has been misinformed.

I'm going to see him this evening to pick up some furniture we purchased. At that time I'm going to pitch that he sell the property and be done with it now. He and his siblings are serious don't wanters. He told me he'd love to sell it now and be done with it, but he doesn't believe he has that option.

I'll post back what happens, but this 'maintenance lease' with a purchase at some point down the road has too many ways it can blow up.

If this deal is to happen, it's going to be a straight up sale. All parties will win. He and his siblings will be free of the property and they will each have a nice chunk of cash. I'll not have to worry about issues down the road that could hamper the sale.

Win Win - I just have to make it happen.
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Account Closed
Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
15y
good luck..please keep us posted :D
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James Vermillion
Lexington, KY · Member since 2009 · 2k+ posts · 1k+ votes
15y
Kevin,

Looks to be a great deal and quite complicated. I am very interested so see how this plays out, so keep the updates coming! Good luck.
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Kevin C.
OP
Investor · McKinney, TX · Member since 2009 · 405 posts · 160 votes
15y
Spoke with another individual that was somewhat familiar with Medicaid and he had an idea why the siblings might be doing what they're doing with the house. It may have something to do with the portion of care that Medicaid is covering.

I'll know more after I meet the son later today.

I'll be asking him who is advising him and see if I can speak with that person so he/she can explain why the house can't be sold now.

I'm betting the advice is from his attorney and if I can speak with him/her that will clear up a lot of the questions I have.

I'd still prefer a straight up purchase, but if I can get an iron clad option agreement, that may work too.

It's definitely worth spending some time with a RE attorney for their take on how this could be structured to minimize any risk.

I'll post back what I find out later today.
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Zach SikesBusiness Member
Residential Real Estate Broker · Edmond, OK · Member since 2011 · 452 posts · 183 votes
15y
That's very interesing! Be sure to keep us updated.
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Kevin C.
OP
Investor · McKinney, TX · Member since 2009 · 405 posts · 160 votes
15y
Spoke with owners son a few minutes ago.
He is being advised by an attorney that specializes in estates.

He said the 'Ladybird Act' is in play here. A quick search brought up information on Ladybird deed, that's probably what he was referring to.
http://www.mortgagefit.com/know-how/ladybirddeed.html

I'll be getting in touch with his attorney, then one of my own to get clarification on all this.
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Kevin C.
OP
Investor · McKinney, TX · Member since 2009 · 405 posts · 160 votes
15y
I now have the contact information for the attorney that is handling this estate.

Owners Son has verified with attorney that everything we've discussed is legal and do-able.

I've left a voice mail with that attorney requesting a call back to go over questions I have.

Will be meeting with owners Son again Saturday to pick up 'maintenance' lease agreement and copies of all documents pertaining to the estate. Will be meeting with an attorney on my end to review the lease, the estate documents and to create an Option agreement that will protect my right to buy property upon his mother's passing at the agreed upon amount.
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Darryl Dahlen
Commercial Loan Officer · Southern Maine, ME · Member since 2009 · 782 posts · 415 votes
15y
What a great post. I hope it works out for you and can't wait to see what comes from the meeting on Sat. Best of luck!
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Kevin C.
OP
Investor · McKinney, TX · Member since 2009 · 405 posts · 160 votes
15y
Picked up a copy of the 'maintenance' lease, power of attorney and survey Saturday afternoon. Had an appt with an Estate Attorney set for Wednesday to go over the lease and come up with an appropriate Option contract.

Got a call about 30 minutes ago from the owners son - said the deal is off.
He said he and other family members spoke with their mom and told her their plans and she got all upset, said she did not want the property leased or sold.

Not sure if that's the real reason or not, but that's what I was told.

Back to looking.....
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