All Forum Posts by: Patrick Durham

I live in a subdivision that was built in the 70's.  Four years ago I purchased a house that was in rough shape.  I ended up doing a total renovation, it turned out great and I have a lot of equity.  During that time I built a relationship with my neighbor (widower) behind me.  After some medical issues she decided it was time to move into a retirement home.

I don't have the money to do a full purchase, but I would like to work out a deal where  I renovate/modernize her home (it is the same layout as mine), then when it is sold I get a percentage of the profit.  I'm fairly certain she does not have a mortgage on it.  My plan:

1. Get current appraisal

2. Renovate the home

3. Sell it - I would get back what I put in + a percentage of the final price minus the original appraisal 

Example (60% to me):

$175,000 - Original Appraisal

$35,000 - Cost of Renovation

$275,000 - Sale Price (after paying all real estate fees)

--------------------------

$65,000 - Total profit

I would then get $35,000 back for materials then $39,000 of the profit.

My questions:

1. Would it be reasonable to approach her with the offer.  I would include her daughter in the conversation just to make sure the family is ok with the situation. 

2. What would be an appropriate cut of the profits to take?  Would 60% be too much, too little?

3. How do I properly protect myself in the transaction?  Add myself to the title via quit-claim?  Standard contract?

Thank you for the information.

It has been a while, I thought I'd give an update. I spoke with around 20 banks before I found one that would work with my situation. They gave me a HELOC which paid off the land contract. It also gave me a little extra to do renovations. After I owned the home for a year (based on the land contract closing) I was able to refinance the HELOC into a conventional 15 year mortgage. My last appraisal was $250,000. However houses in my neighborhood (comparable to mine) are selling upwards of $300,000. Overall it turned into a great investment.

I have a total of three years, but there is no penalty for early payoff. The family would prefer the contract to be paid off early so the can close out the estate.

I also have extraordinarily good records for the work/money I've put into the house.

Is there any easy way to determine if a bank does portfolio lending, or is my best bet to call around and ask?

Last year I started working on purchasing a house that had been vacant for 15 years. The owners passed and it was part of an estate. Due to the condition of the house and some back taxes I had to purchase it with a land contract. The contract was made official and filed with the county in February 2013.

Now I would like to refinance, pay of the rest of the taxes, and get some cash out for some more remodeling. I only owe $45,000 (including taxes) and would like my loan to be around $60,000. The property is now worth $156,000 (appraised the end of June). I have had some trouble obtaining financing because the contract has not "seasoned" for 12 months. Any suggestions on how I can get this financing through? Thanks for the input.

*This seems like the appropriate place for this, I apologize if it is not.