Owner of the townhome next door approached me to buy his half

[Laura Cardenas]

Good evening everyone!

Need some advice from the vets please..

My neighbor has approached me multiple times, since I moved in a year ago, asking me if I would be interested in buying his half (Our house is a duplex, but not zoned that way, they're zoned as townhomes).  

He asked me again this week. For the first time I asked him how much he's looking to get for it, he said atleast 70.  I asked, if I don't buy it are you going to put it on the market? He said no I plan to call one of those "home buying companies" because it needs quite a bit of work. I told him I would talk to my SO and then I would be back in touch. 

My plan so far is to go knock on his door and ask him if I can take pictures and just check the place out because I've never been in his half.  Put together my must have/wish reno list, then have a contractor give me a bid. I paid 89.9 for my half. I believe I could get at least 1,400/month for rent for his side, so I'm happy to pay 70, but what if it needs 20k in rehab?  Do I offer him 50(He bought it for 50 in 1994)?

I did some research and found out he does not have a mortgage.  I'd love to bring seller financing to up as an option. Anyone have tips on how to put together some sort of packet to bring to him so that he knows this is a legit option and to help him see the benefits of this?

I've also looked into hard money lending for this deal, and was assured that they could make this happen for me as well. 

Also: The homes need to be owned by 1 person in order for the zoning to be changed to duplex or mulitfamily. Once that happens I could refinance and put both under one mortgage. I spoke with my lender who got me my original mortgage and asked if this would be a possibility and he basically said no because I don't make enough money anymore, so this is the reason why HML would be my second option [I was working full time when I got my first mortgage, then I had a baby and was a SAHM for 8 months and have been working only 2 days a week since October]

Any advice? Am I on the right path? Thanks in advance.

Have a wonderful week!

Laura Cardenas

[Steve Hall]

@Laura Cardenas 

Your neighbor must know your job situation. I would be up front and say, "I'd love to buy your side but I doubt I would qualify for a loan. Would you consider some sort of seller financing?" If he says "Maybe." or "I've never thought about it" then ask, "Would 15 years be too long?" If yes, ask about 10.  In 10 years, I 'm sure you will be in a much better place financially. Try not to go less than 10. Once you get down in the single digits, the numbers might not work... you'll have to check.

If you can get past the hard part about HOW you can afford it, then the next step is to get a contractor (or 2 or 3) in there to get you a quote on rehab. Also, get with a real estate agent to get you confirmed comps for rent. Once you know all the costs involved, you will know if $70k is a good deal, or if it's too much.