Hi, I meant to keep this first inquiry post Simple so I’m sorry if it should be broken up into multiple posts!!
We have a Seller who is interested in a Seller Financed deal (as the subject noted).
3-unit, elderly married couple live in one of the three units and have since they bought the property in 2005. The other two units are Short-term rentals (STR). They are open to an Installment Sale but want to stay in their unit for 5 years, and in our very early conversions have said they are open to a Lease-to-Own situation….which is its own topic to discuss later especially the idea of splitting certain Expenses.
I’d like to be steering the agreement so I’m doing some homework and asking question on here. The plan is to talk with them again in mid-December when we stay at their AirBNB. We have stayed there 5 times in the last two years and they genuinely seem interested in my partner and I getting the property.
I am open to any input you good folks on here have, and have listed a few questions to chew on.
Before we get too far into discussions I am thinking of spending due diligence dollars on the following;
-Private appraisal
-Seeing if there are an open code violations (the town charges to pull these up).
-Current on property taxes
-Current on mortgage / any line of credit
-Title report
-Inspector (for our own benefit)
Re: splitting expenses as they want to stay, I’m looking for advice on whether we;
-Pay their monthly outstanding mortgage (saw there still is a mortgage via county clerk records) because it seems weird to charge them rent, AND we want to utilize the Age and income related tax exemption they are receiving while they are still living on the property if possible…which is a more nuanced discussion for maybe another post as I don’t want to get into the “weeds” talking about Capital Gains and Adjusted Gross Income, etc.
The split on bigger ticket expenses? 50/50, or 65/35 since we will have the ability to rent the two units as STR.
-property taxes
-Insurance
-Repair / maintenance
-CapEx reserve
I'd like the Seller to provide a list of upcoming CapEx that they are aware of as there is only so much I / an inspector will know with some poking around. The owners have been in the house since 2005 and know the property intimately.
We will be visiting / staying at the property as much as we are able , it’s 2hrs away, and we’d like to rent the units at least 50% of the year, 182 nights. The Seller has been renting the two units through AirBNB and a Squarespace website they created and maintain.
There is a cleaning service, but should we split any of the rental revenue with the current owners or just clearly defined them as an on-site property manager and maintence, and pay them for the service? We’ll have an agreement about expenses over a certain amounting needing our approval.
We realize will need to pull in a tax advisor, an accountant, and our lawyer, in an effort to make this a win-win agreement as much as possible. The property is in Upstate NY, and we are open to referrals for the aforementioned!
