Help an elderly woman keep her home?

Question

The short version: I'm looking for creative ideas about structuring a deal to keep an elderly woman in her house for as long as she can.

The details: I recently had the pleasure of meeting an elderly woman who asked me to make an offer on her house. She has lived in the same house for 50 years (!) and recently lost her husband. She said she's looking for assisted living but its too expensive, cliquey, and she loves her neighborhood. She is primarily concerned about her lack of a first floor bath and maintenance/upkeep of the property. The house is a beautiful 3/1.5 foursquare in good repair in a nice neighborhood. Newer roof, mechanicals, stucco w new paint and beautiful woodwork inside.

I have somewhat limited financing due to multiple deals and would prefer to avoid taking a mediocre deal to my bank...

I would like to propose a way to keep her in her home for life (or as long as she can reasonably stay). I would like to offer to build a first floor/accessible bath (bad knees) and possibly a garage (analogous to a down payment) and maintenance and upkeep ( the "mortgage payments") in exchange for her deed upon passing away or going into a nursing home.

I would like to hear others opinions, experiences and considerations when structuring a deal of this nature. I think this could be a real win-win for both of us if she's interested.

TIA,

Matt

P.S. I realize this doesn't cashflow, etc. I'm treating this like a sweat equity/long term payout deal...

Thomas S. · Answer

Your not really trying to structure a business deal you are basically trying to get her property for next to nothing.Help her get a reverse mortgage if she does not have close family to assist her. If she does have family make sure she is in touch with them and step out of the picture. If after she passes family gets wind of your actions you risk being dragged through court proceedings for years. Lawyers can make your life hell if the family claims you took advantage of a old lady and stole their inheritance.

Wendy Hartmann · Answer

I'm new to the investing side, so I am speaking as a business person here.Greg is right about any family coming in to overturn the deal, be sure you understand who will swoop in after her death and try to get the property and your deal overturned.If you are in no hurry to get into the property, then maybe you can structure the sale in one of the following ways: (1) possibly a sale at a fair negotiated price, with a leaseback provision, (2) sale at a fair negotiated price, where she carries the financing so you pay her a monthly installment and she can afford the assisted living facility, or (3) have an attorney create an agreement of sale that you and she negotiated a price and if that agreed upon price is at least, say 80% of FMV on the date of death, her heirs must honor the agreement and sell to you at that price, or give you a first right of refusal to purchase the property for say 80%, of FMV on date of death. Just some thoughts.

Thomas S. · Answer

How will you structure the deal in preparation for the time when her health deteriorates to the point she can no longer live in the home. At that point she will need all the money out of the home.Your best option is to possibly negotiate a first right of refusal and expect that she will not be staying in the home by herself for very much longer. You want a clean and fast closure not a prolonged assisted care investment. Forget the old lady and concentrate on setting your self up to purchase at fair market value when the time comes for her to sell. She has family so leave her to them to care for.

Matt Fisher · Answer

I understand the concerns about family and attorneys. I'd work with mine to mitigate this risk. I want her family to be involved as soon as we find agreeable terms. Her daughter is a practicing attorney.This is not a "next to nothing deal. It would require a substantial addition to make the house liveable and if she lived another 20 years the maintenance, lawn care and snow removal would be considerable expenses. If I paid her cash it would go towards assisted living, not inheritance so its a wash...The value of of the home is approx $140k which would be consumed immediately buying into one of the facilities. Carrying the financing wouldn't provide close to enough funds needed to pay (upfront costs of) assisted living. I don't think leaseback alone would pay for the addition she would need but I am still thinking about this (and was originally considering this route). It certainly is less perilous.Any other suggestions about how to do a deal similar to what I suggested?