All Forum Posts by: Timothy Michael Mick

@Bill B.

Yes, there would be major issues if the situation you describe was the case. I apologize if I made the situation unclear:

"A few years ago, a pipe broke in the upstairs. She hired a family member to fix it but ran out of insurance money before he could complete it. Now the building is sitting there, down to the studs"

The unit has been down to the studs since 2019 completely vacant and doing nothing but costing her. Her family member left this poor lady with a dead house which is one reason I'm trying to figure out a way to buy this house from her without ever having to deal with the family. A win-win would be providing her steady income of 2-3k per month and me renting at 4.5-5k (this is the number I've come up with due to market research, not actual rent).

I probably do misunderstand TOD which is why I'm asking if there is a way to make this work so that 1. She continues to hold the deed for her life (she does not pay capital gains tax) 2. I receive the deed upon her death but continue to make payments to her heirs (I gain control of the deed so there is no contest of ownership from her less than reputable family members)

I don't have much experience with creative finance and this seems to be a unique situation. I am just brainstorming at this point trying to provide value to this lady while still protecting the 200k I would be putting into this. 

Would this deal be worth touching and if so, how would you structure it?

@David M.

Life estate with remainderman is something I am researching now.

There could be wiggle room with the taxes... such as if I make a downpayment large enough so that she could cover her capital gains and I get the deed immediately. She would have a lien against the property that I would then pay over time. There are 2 issues - 1. Lowball - the more upfront I'd give her, the less I'd be able to pay. This is why she has already turned down lowball cash offers from other buyers. 2. Due on sale - I would have to pay immediately or I would run the risk of the due on sale clause being triggered on the existing mortgage. So I don't see a way that this would work...

Yes - The seller financing would be would be installment payments that would trigger small amounts of the tax.

I appreciate both of ya'lls attention on this. Thank you!

@David M.

In between now and her death, we set up a seller financing structure so that I am paying her over 20 or 30yr and renovate/renting it out. She will likely die before the terms are concluded and I want to have control of the deed by that point, hence the post.

Purchase Price to be negotiated - anywhere 350k to 550k. Whatever I can negotiate with her, based on terms we set up... Contract to be set up in the next month. 

Cost Basis - she bought the house in 2001 for 100k

I have 200k for reno and payment until it is stabalized.

Why would I consider a lease option? Seems like an unattractive "creative finance" option for this deal.

Thank you

Thanks Matt! It's in Nevada. The "Deed upon Death" option is new to me. I will explore.

Side note - I am also an engineer doing stormwater design in CA and live in SD. Small world.

Are there non-disclosure laws that prevent transaction coordinators from sharing information with other people?

I have a 90 year old friend with a triplex. A few years ago, a pipe broke in the upstairs. She hired a family member to fix it but ran out of insurance money before he could complete it. Now the building is sitting there, down to the studs:

-550k House ARV

-3 units rental at $4500 to $5000

-140k owed on a mortgage

-105k renovation cost

Requirements:

Her

-No capital gains tax for entire sales price

Me

-Buy and hold

-Deed in my name upon her death

-Low Down, Monthly payment 2k to 3k

What is the creative way to structure this deal so that these requirements are met?

Here are the issues I see with standard ways of structuring this deal:

-Subject to existing financing – deed transfers immediately and she has to pay capital gains

-Executory Contract (Land Contract) – the deed does not transfer upon her death but goes to her family. The biggest risk to me is being taken to court by her family who will inherit the deed.

Is there some creative way such as setting up an irrevocable trust so that upon her death, I inherit deed to the property and her family inherits a note to what I still owe? (The issue I see with this is that 1. Capital Gains tax is triggered upon transfer of deed and I have to pay. 2. Due on sale – from mortgage (or could I inherit the mortgage as well)).

Any advice is helpful.