phialove,
You have everything you need in place. You don’t have to take possession of the property to control the transaction and make a nice chunk of change, far more than if you panic now. If you charge the buyer a fee without being a broker, you’re headed for trouble.
I am assuming your deal is a “subject to” and you don’t want your name on title for whatever reason. I suggest you do this.
DEALING WITH THE SELLER
Tell the Seller you must structure the deal to best protect everyone’s interests.
Tell him: "If you are willing to wait up to 3 years for most or all of your equity, and remain on your loan for 3 years I am prepared to legally assume 100% of the responsiblility for all mortgage obligations, maintenance and repairs, management and upkeep of your property. As a real estate investor, I make this proposal in the hopes of obtaining income tax benefits relative to mortgage interest and property taxes. I will agree to pay 100% of your equity in 3 years and reserve the right to sublet the property, while fully guaranteeing the performance of such a pre-screened party re payments, insurance, taxes, maintenance, etc.
During my tenure in our agreement I ask only that you continue the existing mortgage financing in place, and that the property be held in a bonafide land trust in your name (AT MY EXPENSE). I require only that you name me a Co-Beneficiary of the trust, and a triple-net lease tenant in the premises. You are not obligated to transfer the property’s title to me until I have fully retired your existing mortgage and repaid current equity.
He should have no problem with that. He doesn’t have to worry about dealing with the tax results of a sale because there has not been one, and he can depreciate the property for the next 3 years.
DEALING WITH YOUR BUYER
Then tell your Buyer that the home you have is in a land trust and you need him to live in the property, make the payments on time, and be responsible for maintenance and repairs on a 3-year, triple net lease. Tell him: “There will be no bank or credit qualifying. If you agree to this and keep your end of the bargain, I’ll give you the house. How? When you sign the lease and pay the closing costs (your cost of setting up the trust and 3 advance lease payments, I will immediately assign you a Beneficiary interest in my trust. You will, although only leasing, acquire IMMEDIATE home ownership benefits and are allowed by the IRS to write off the monthly mortgage interest payments and property taxes. You will also share in the future appreciation of the home on a 50/50 basis. At the end of three years, if you want to buy the property, you can do so at Fair Market Value. If you choose not to, there is no obligation or penalty.”
HOW YOU MAKE MONEY
If your Mutually Agreed Value (MAV) is $100K with the Seller, your MAV may be $110K with the Buyer. That’s $10K in 3 years when the Tenant refis and buys you out. Make sure you have about a $200 per month positive cash flow. (another $7200 over 3 years); and split future appreciation 50/50 with your Tenant. If it sells in 3 years for $140K, you’ve made another $15K.
To summarize, you will make about $32,500 on this deal over 3 years without going on title or on any loans. You have zero responsibility for maintenance or repairs (your tenant does), and zero responsibility for payments (your tenant does), and zero responsibility for collecting rents (the Trustee’s payment processing company does that). You just collect your $200 positive cash flow in the mail each month.
That’s how I do it and I’ll be happy to answer any questions. Best of luck to you, and don’t be afraid – just be careful.
Da Wiz