I like DANS idea,
Here are a few ideas … I’m sorta with Dan. Sell for $275K. Payoff the 90K. Take the 185K out in the country where land is cheaper. Buy 2 lots beside each other. Build 2 homes. Live in one & Rent one out or better yet do owner financing at a little higher interest rate thus paying more of her expenses every month with the added extra interest. Also she could get a $10,000 down payment financing someone with shaky credit but with a good job for a period of say 1 year (not hard to find). The worst thing that can happen is the person you are financing quits paying and you get the house back to re-sell yet again for another $10K down payment going right into your bank account, plus say the guy only pays for two years, you get the house back and isn’t it now worth more after 2 years? Of course it is! Hasn’t he paid you for two years? Sure he has! So even if the person you are financing goes out, you are up thousands of dollars. One distinct advantage of owner financing over renting is…you don’t have to keep fixing it up everytime you get a new renter, because they are buying the property and they are responsible for the upkeep of the home… which means they will probley maintain the home better, since they are buying the house. You are making good money at every event, even if a bad event happens, GOOD FOR YOU…you just made more money! The beauty of this is with the owner living next door you sorta know the people and know whats going on. They are more apt to take better care of the property knowing the owner lives next door! Another advantage is… if you should get the house back and ever need to work on the house…its right next door! Another thing you could do is if you live next door, you could tack on a small grounds keeping fee which would mean they would pay for half of your yard care…like cutting grass, this way you know things are being kept looking nice and you are getting a discount on your services while eliminating MOMs grounds maintenance worries. Another huge advantage of owning connecting properties is … When houses are vacant they are more apt to be vandalized. Living next door is a great way to keep an eye on it so you don’t have to ride by the home everyday while its empty. Plus if things do go bad for the people you are financing … like the bread winner in the family gets laid off or something you will know about it. And the best part is … you might be able to help them out somehow by offering assistance in some way. One of the rewards in this business is helping people out when you can…even if you don’t make a dime or it cost you something. Its all up to you!
MY MOMS A HOME BUILDER!!
Build 2 homes for 185K, when they are finished…worth 263K or more. Alot of times you can find builders that will pre-sale lots at a good discount, the more you buy the better the price. She might even be able to find a new developement going up right now , where she could buy 2 homes side by side at a good pre construction price. Somethimes this can be good because you already have everything ready to go and the houses are ready in 2 - 3 months. By the way…this can also work with condo’s.
No finding a good builder…architect…framer and all that junk. You can see the builders work right there before you buy your houses. Also some builders have their own financing capabilities, if you run you plans by them they might accomidate your mother with a home to live in until hers are finished. Nothing like having a house sold before you start it.
Or BETTER YET…USE MOMS MONEY AS LEVERAGE TO DOUBLE YOUR INVESTMENT POWER. Buy Finding a Flat APR INVESTOR to match your $$.
Sell the townhouse … get the 185K or lets just use 160K incase she had to sell it for less. Take her 160K and find a lender to match that 160K at 18% interest per year. You now have a total of $320K. Build 2 or 3 homes as we described before. The $320K investment would be worth $420K to $480K depending on how much houses are running in the area and how fast they appreciate as the homes are being built. And supply and demand of course. Why is the APR INVESTOR happy? Cause he just made $29,000 off his $160,000. For doing nothing but putting up the 160K.
Yes, I’m sure he’s worring about getting paid but tell him he can go to the properties anytime he wants to, just to ease his mind … or better yet maybe go with him and talk to the supers…showing him you have things going on and his money is safe. If you are experienced in these types things and all your cards fall into place you could build two homes every 6 months or 4 per year, that way you are optimizing the return on every investment dollar before it comes payable back to the investor with the same 18% rate…acuatally if you did this, it would effectively be doubling the amount being built or in other words making that interest rate 9% APR by splitting the 18% because the money is being used twice in a year instead of once. 2 for one equals 50% savings, divide 18% by 2 = 9%.
Lets say you build 2 homes worth $227,500 each when they are finished. Sell 1 for $220,000 for a quick sell. Pay realtor and other fees leaves you with $207K. Pay off the 50% investor and his 18%APR which is $188K. You now have $19,000 and you own a home worth $227,500. WOW, you made 80K. Better yet if she could sell the townhouse for 185K she could do the above…leaving her 25K cash to find a place to live either renting or using it as a downpayment on a condo. With 50% ownership in a 450K Real Estate deal she shouldn’t have any problem getting a great rate on a condo loan, then she could just sell both homes for say 450K minus 188K back to the investor and she has a cool $262K and a great start on a condo. Even after paying taxes on the profits she would still have about $235K or more left even if selling at below retail. What a deal! This is how family businesses start out.
After that she could use the $235K to do the same thing but a little bigger, she could even pay you 50% of the profit to run the whole thing…working for your MOM. You both make 50 to 75K each per year if you repeat and the wealth then rolls in before you know it your making serious bucks! The biggest obsticle to making money in real estate is having the money and not having to borrow it to do your deals.
The sky is the limit the more capitol you have in the deal the more other investors are apt to jump in and then more want in. So say 160K investment could be marketed to get another 2-3-4 investors to join in at a good APR rate, everyone makes money and is happy campers, once they make great APR from you, they are usually ready to re-invest their whole amount again. If you leveraged 160K 5 times that would be 960K, you could make some serious income with that!
Ain’t problem solving fun!