Selling to a neighbor

[Christopher Howard]

Curious what options people recommend.....I have a house hack 2 family I am going to sell this spring. I owe 270k and will likely sell in the 450-500 range. Large range I know, but duplexes here (Massachusetts) list for 475 then sell for 550 so I'm being conservative with my sales price. My neighbor (friend) wants to buy the house and rent out both units but he wouldn't qualify for the higher end of the sale price and I intend to get as much as I can. I'm wondering if people have ever sold and retained a percentage ownership. My thought was to have him take over the mortgage (270k) and pay me 100k (all in 370k) and then I retain a percentage ownership say 25%. The mortgage is 1900 and rents over 3k but its more beneficial for me to sell right now. Its a great house so if I'm able to keep partial ownership I'd like to. Wondering if people have experience with something like this or have other ideas that may benefit both of us.

[Lien Vuong]

What you're referring to is essentially a wrap around mortgage which is pretty tricky because I doubt any lender would lend him a portion of that without having first position in the loan (your initial loan is the first so his would be second), and it would be an unacceptable condition for your lender because they underwrote the loan under your occupancy and your financial scope. 

Sounds like it too complicated so not a large figure and a two family property. I am certain you'd be able to get a strong price on the market and since youre an agent, you can have a good grasp of the deal. When you sell this you will qualify for 50% of the owner occupancy tax credit (other 50% is the other half of your duplex which you will have to pay taxes on or defer into a 1031x) so it's still strong returns in a booming market with a lot of house hackers. 

Best of luck and I would try to simply whenever possible.