So I recently had the opportunity to reach out to a neighbor who owns a duplex (She occupies one side and the other is vacant) and asked if she knew anyone interested in selling rental properties or local owners I can learn from. To my pleasant surprise she admitted she herself just learned that there is $20,000 of outstanding taxes on her property! She discussed the potential for a reverse mortgage, her desire to actually stay in the property (possibly downsize to the smaller unit) and the option to just sell and move. I own a triplex being renovated on the same street and a majority of my capital is tied up witg that renovation. As a brainstorming session occured with my motivated fellow newbie partner we began discussing options requiring the least amount of our money.
The owner is 86, in good health and would like to stay in one of the units (both 2bdrm) and the property is completely paid off and is valued at about 190k. She put the current deed in the name of a self owned corporation in 2015.
Immediately the option that came to mind are trying to fasion seller financing via promissory note and quit claim deed (Because of tax issue) and providing a long term lease to the seller at no cost in order to compete against her options of reverse mortgage or cashout. The other options are full purchase with hard lending/private money for the down payment.
I really do care about the community and my neighbor's well being and quality of life. I fear whatever finance option a broker/lender shows her will be to her disadvantage. If we structure payments to her for 15-20 years that beat the reverse mortgage we can still cash flow (Not the major priority but still a priority, equity wins).
Big questions:
-Would the promissory note interfere with potential refinance? (Fingers crossed for a unconventional BRRRR)
-What legal obstacles are we looking at regarding the securities aspect?
-What legally would we be required to stipulate in order to write her into a lease or would that be separate from the deed transfer?
-What if (heaven forbid) my awesome sweet neighbor passes away before the note is completely paid off?
Hopefully there is enough information to give an idea of what the real problems are at this stage.
Thanks
Randy
