Author Topic: Inherited a home at my personal rock bottom, Not sure which way to go.  (Read 8945 times)

Nollo

  • 5 O'Clock Shadow
  • *
  • Posts: 5
got 750k cash buyer for the home, Thank you all. Will be staying in my apartment in boulder while i invest the cash and start looking for a good buy here in town.

Nollo
« Last Edit: February 09, 2015, 10:05:25 AM by Nollo »

Capsu78

  • Pencil Stache
  • ****
  • Posts: 733
  • Location: Chicagoland
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #1 on: January 30, 2015, 01:53:35 PM »
I can't help you with your decision, but we rented a movie this week that almost mirrors the RE side your situation- My Old Lady

http://www.imdb.com/title/tt2908856/?ref_=ttcz_cz_tt

It has a fine cast that may give you a laugh.

Nollo

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #2 on: January 30, 2015, 01:57:33 PM »
I could use a few laughs in this stressful time, Thank you!

Bicycle_B

  • Handlebar Stache
  • *****
  • Posts: 1818
  • Mustachian-ish in Live Music Capital of the World
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #3 on: January 30, 2015, 02:07:43 PM »
Regardless of what you decide you will learn something!

Giving your friend title while he owes you half a million dollars while you only get sixty eight thousand could leave you short of cash based on your stated desire for school _ if you decide on that route maybe you should keep the title and offer only a rent_to_own contract in exchange for the sixty eight thousand


Bicycle_B

  • Handlebar Stache
  • *****
  • Posts: 1818
  • Mustachian-ish in Live Music Capital of the World
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #4 on: January 30, 2015, 02:12:48 PM »
Re dealing with friends and finance:

"When a person with money meets a person with experience the person with the money gets the experience and the person with experience gets the money"

In this situation you are the one with money compared to your friend (or "friend")

The other saying I have heard is to decide beforehand which is more important in a deal that involves money and a friend because you have a good chance of losing at least one of them

Good luck Nallo whatever you decide

Bicycle_B

  • Handlebar Stache
  • *****
  • Posts: 1818
  • Mustachian-ish in Live Music Capital of the World
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #5 on: January 30, 2015, 02:16:45 PM »
One last thought:

MMM has mentioned a website for real estate investors called Bigger Pockets where the members might have wisdom  on this too


ShoulderThingThatGoesUp

  • Magnum Stache
  • ******
  • Posts: 3056
  • Location: Emmaus, PA
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #6 on: January 30, 2015, 02:21:46 PM »
Mixing up friends with money doesn't seem like a good idea - and if the house has issues your friend might walk on your owner financing. Getting $600k cash for the land does sound like a good idea. One person can live pretty well off of $600k. By standard rules, it doesn't sound like a good investment property.

dandarc

  • Magnum Stache
  • ******
  • Posts: 3978
  • Age: 37
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #7 on: January 30, 2015, 02:26:53 PM »
This part concerns me.  Why can't your friend get a loan from a regular bank?

Quote
I can walk away with $568,000.00 @ $68,000.00 Down, $500,000 owner financed at 3.25% for 10 years.

Better to walk away with 568K or even somewhat less in cash.  Do you want to invest in mortgages?  If so, do you really want all of your money tied up in one note?

CommonCents

  • Handlebar Stache
  • *****
  • Posts: 2386
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #8 on: January 30, 2015, 02:27:19 PM »
If you aren't sure, renting it out for a year or two is a way to postpone a big decision such as selling or moving towns.  Would your friend want to rent the house from you?  (I wouldn't sell it to him directly, although a sale where he pays full value and takes a mortgage is fine, otherwise BarrettSun is right.  You can lose the house, money and friend if you are not careful!  His owner financed mortgage is not only riskier and for less than the open market can bear, it's below market rates on mortgages.  I'm not really sure this is a very good friend based on the offer.)

And this is totally none of my business, but I couldn't help being curious - you said are the only heir to the estate, but your father has another very young son, age 6?  That doesn't quite seem right.  Did your father set up a separate trust for him?  (If not, are you sure it's all yours?  Both legally, if he died intestate in particular, and morally, in terms of leaving your brother with nothing?)

thedayisbrave

  • Pencil Stache
  • ****
  • Posts: 700
  • Location: Raleigh, NC
  • CFO @ My Life
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #9 on: January 30, 2015, 02:51:31 PM »
I understand wanting to give the friend a deal, but in this case I think it would be in your best interests to sell (not to friend) and take the money, diversify it, and live your life to its fullest where you want (which seems to be Colorado).

Having essentially all my money in a house, an illiquid investment, in a different state, that I have no intention of ever living in... would definitely put me on edge. 

PEIslander

  • Stubble
  • **
  • Posts: 168
  • Age: 59
  • Location: Prince Edward Island, Canada
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #10 on: January 30, 2015, 03:01:26 PM »
Given your honorable feelings of responsibility for your grandmother & young half-brother, and your ambition to study law & live in Colorado - I'd suggest selling the home.

Have the property professionally appraised by an independent real estate appraisal firm. Don't just ask a real estate agent for an opinion. Pay a professional appraiser who'll research & report to you all the comparables and give you a more objective opinion of the fair market value. You and your friend may be inaccurate about the value.

I personally would not consider extending your friend a mortgage. If he can pay those terms then he should have no problem getting a mortgage from a bank etc. so he'd owe them the payments and not you. The mortgage provider would give you the full amount of the sale and your friend can pay them back. If your friend can't get a proper mortgage then you certainly should not be willing to provide him one! You do not need the problems such an arrangement can lead to. Banks are in that business and do mitigate the risks. It would be unbelievably risky for you in your situation to extend him a mortgage. Please do not do it.

MsPeacock

  • Handlebar Stache
  • *****
  • Posts: 1567
  • Location: High COL
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #11 on: January 30, 2015, 03:01:48 PM »
Miami will always be there, and places to live in Miami will always be there. My recommendation - sell the house. Do not owner finance the house for your friend. Sorry, that is very risky and potentially legally complicated if things head south. Just don't do it. A bank is big and can assume the risk of the mortgage. This house is all you have - if your friend stopped paying you'd still have to deal w/ the expenses plus the legal costs of extracting him from the house.

You can get another house in CO - you can invest the money. Any number of things you can do. All of them are simpler than trying to renovate the house from a distance, when you have no capital, to then either sell it or rent it out. The money will be much easier to manage. Selling the house doesn't mean you can't or won't come back to Miami - it just means that you don't have to deal with the house.

Did your father not make any financial arrangements for his young son? Maybe if you sell the house you would be in the position to set something up for this child who has lost his father at a very young age?

Kyle Schuant

  • Handlebar Stache
  • *****
  • Posts: 1247
  • Location: Melbourne, Australia
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #12 on: January 30, 2015, 03:13:09 PM »
Sell or not? Flip a coin.

Seriously.

Your feelings of relief or distress at the coin toss result will tell you what you really want to do.

Nollo

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #13 on: January 30, 2015, 03:36:19 PM »
Wow , Thank you all, a tremendous amount of solid advice. I often think too much with my heart, and my mind is resounding with what many of you have said.

The situation with my little brother is a unique one, My father gifted me the house actually before he was born, but lived and maintained it. He was a great father, but at 71  yrs old when this child was born, it was a surprise from a rather new acquaintance.  My father did have a trust set aside for the child and it pays for him and his mother's  rent/food expenses monthly. I plan to have him stay in Colorado for the summers, and enroll him in sports/camps that I experienced in my youth.

Flipping a Coin suggestion did have me wanting to sell the house in Full, arranging for my friends renting currently to have ample time to relocate.And moving forward in Colorado.

I am getting the property appraised on Monday. I will re visit the idea with my friend of getting a loan from the bank to pay me, that would work. For a fair amount based on appraisal and amount of work he will have to do.

Thank you all again, A great community to think through these situations. 

Nollo

maizefolk

  • Magnum Stache
  • ******
  • Posts: 4668
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #14 on: January 30, 2015, 03:40:46 PM »
Sell or not? Flip a coin.

Seriously.

Your feelings of relief or distress at the coin toss result will tell you what you really want to do.

I have used this for various complicated and stressful major life decisions and can vouch that it works. It's essentially a short-cut that allows you bypass a lot of intellectual considerations and get straight to what actually matters "which choice will leave me feeling less regret?"

crispy

  • Bristles
  • ***
  • Posts: 469
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #15 on: January 30, 2015, 03:43:32 PM »
Definitely don't become a mortgage lender to your friend.  It just complicates an already complicated situation which is what you are trying to escape in the first place.  Put it on the open market and see what you can get for it.

NCGal

  • Stubble
  • **
  • Posts: 138
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #16 on: January 30, 2015, 04:18:36 PM »
Just a quick comment -  and my view may not be shared by you but it all depends on your emotional make up. If the house has sentimental value for you, your positive memories could become associated/tainted by a deal going bad with a friend - or a relationship with a long distance tenant/renter that becomes a nightmare. I'd want to wrap up the situation nice and neat and not have any negative ties to it.

MrMoogle

  • Handlebar Stache
  • *****
  • Posts: 1128
  • Age: 35
  • Location: Huntsville, AL
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #17 on: January 30, 2015, 06:45:56 PM »
This part concerns me.  Why can't your friend get a loan from a regular bank?

Quote
I can walk away with $568,000.00 @ $68,000.00 Down, $500,000 owner financed at 3.25% for 10 years.

Better to walk away with 568K or even somewhat less in cash.  Do you want to invest in mortgages?  If so, do you really want all of your money tied up in one note?

Maybe you edited your original post, but I didn't see the quote about owner financed. 

If your friend can come up with 568k, it might not be a bad deal.  To sell it using a realtor for 600k you have to pay 6% sellers fees, which is 36k, which would bring your net down to 564k.  You will have to do this stuff yourself, but it's not a huge disadvantage.  You'll have the money sooner than later.

I wouldn't do an owner financed mortgage at that low of a rate.  If he can't get one from a bank, then there's higher risk, and therefore needs to be higher return.  I wouldn't do a loan like this with a close friend, it's a recipe for disaster. 

Dicey

  • Senior Mustachian
  • ********
  • Posts: 13357
  • Age: 62
  • Location: NorCal
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #18 on: January 30, 2015, 07:16:58 PM »
This is a tangent, but it may be something to think about if you decide to sell up and move to CO (which is my vote, BTW). It is my understanding that with the legalization of pot, home prices have skyrocketed. Once a few more states legalize pot (Washington and Oregon just jumped on the bandwagon), the CO market may be in for a correction. Make your decision to buy or rent carefully, don't let an infusion of cash cause you to make an ill-timed move.

Here's a weird thing I do when I'm having trouble letting go of something, particularly something with sentiment attached. I take a lot of photos. Then I look and look at them. If I can imagine my life without it, then out it goes, but I still have a record of the thing I once owned. If the photos tug my heartstrings, then I pay attention. Sometimes I still let go, but somehow this process makes the decision easier. And yes, there's a history of hoarding in my family, so sometimes this is really a struggle. The photos seem to allow the crazy-hoarder part of my brain go back into hibernation.
« Last Edit: January 30, 2015, 09:10:20 PM by Diane C »

mozar

  • Magnum Stache
  • ******
  • Posts: 3235
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #19 on: January 30, 2015, 08:51:50 PM »
I vote for selling on the market. My understanding is that February is the height of the selling season, and Miami real estate has come back, so you don't have to sell at the bottom at least.
It's hard selling on the open market but that's why we have banks and real estate agents and appraisers and stuff. My mother and 3 brothers tried to sell my grandmothers house in Ft Lauderdale to a friend. One of my uncles accidentally sent the friend an email about how he was thinking about going with some one else. The friend freaked out and called him disloyal, so stupid. So they put it on the market and got 20k more.

stashy

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #20 on: January 31, 2015, 10:59:25 AM »
From reading your post it seems clear what you should do.  I can tell from your writing that you know what to do and your gut is telling you.  Move on from the property.  Follow your gut instinct, it will never do you wrong!  Sell it and use the positive gain in the way that would make your father proud- by following your dreams.  You'll have the money for school or wherever your heart takes you.  Don't live in a place you don't want to, life's too short!  Follow due diligence and make sure you're getting what the property is worth, definitely don't mix friends and money either.

totoro

  • Handlebar Stache
  • *****
  • Posts: 2144
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #21 on: January 31, 2015, 12:13:29 PM »
I also would lean towards selling unless you decide to stay in Miami.  The money would give you a great head-start in Colorado.

JLee

  • Walrus Stache
  • *******
  • Posts: 6075
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #22 on: January 31, 2015, 02:00:29 PM »
What tax impact will you have if you sell it for $600k?

PEIslander

  • Stubble
  • **
  • Posts: 168
  • Age: 59
  • Location: Prince Edward Island, Canada
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #23 on: February 01, 2015, 04:49:50 AM »
I see the house has been listed on Zillow for 19 days. Current asking price is $950k (a $50k reduction from the original listing).

http://www.zillow.com/homes/for_sale/80783315_zpid/25.779508,-80.215677,25.762987,-80.243572_rect/15_zm/1_fr/

CommonCents

  • Handlebar Stache
  • *****
  • Posts: 2386
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #24 on: February 01, 2015, 09:57:25 AM »
I see the house has been listed on Zillow for 19 days. Current asking price is $950k (a $50k reduction from the original listing).

http://www.zillow.com/homes/for_sale/80783315_zpid/25.779508,-80.215677,25.762987,-80.243572_rect/15_zm/1_fr/

Interesting - that's a vastly different price than you posted above. 

Fuzz

  • Bristles
  • ***
  • Posts: 387
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #25 on: February 01, 2015, 11:29:24 AM »
What are you trying to get out of law school? Do you know lawyers with the job that you want to have when you graduate? Do the lawyers with the job you want enjoy it?

Please don't go to law school just because you want to re-enter the workforce as a professional, or because you think the training is useful even if you don't want to practice law.

IMO, the decision to go to law school is just as big (or bigger) than your decision to sell your house.

Dicey

  • Senior Mustachian
  • ********
  • Posts: 13357
  • Age: 62
  • Location: NorCal
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #26 on: February 02, 2015, 01:53:45 PM »
I see the house has been listed on Zillow for 19 days. Current asking price is $950k (a $50k reduction from the original listing).

http://www.zillow.com/homes/for_sale/80783315_zpid/25.779508,-80.215677,25.762987,-80.243572_rect/15_zm/1_fr/

Interesting - that's a vastly different price than you posted above.

WTF? - You can't be serious about selling this if you have no interior photos and a string of all caps in your description. The satellite shot lifted from the internet screams that you're not a motivated seller. Listing it poorly at an inflated price makes it look like you're setting yourself up for failure - Well, I tr-i-i-i-i-ed to sell it... - instead of making a real decision. Do it right once you've made the decision or don't do it at all.

Nollo

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #27 on: February 03, 2015, 12:20:43 PM »
I am sorry the zillow posting was just to see if there were international buyers and to regain interest from interested buyers in 2009, It is not a serious attempt to sell the property. I am not ready to deal with the attention a proper zillow posting would bring, as this house has not a single comparable in the neighborhood. I have been meaning to update it with proper pricing and photos, I am still going through so much personal property I wouldn't even want to show it yet.

In 2009 my father listed the property @ 1.2 Million, properly, on the MLS and through other sources ( he was a Realtor) . He didn't get much attention then but In his heart did not want to sell, was only testing if someone really wanted the property. If we just go by Square Footage and the average price per SqFt in the neighborhood the house would list at $800,000.00. Due to its current condition ( though completely livable as 7 people live here now) A new buyer would need to invest $50-70k.  So realistically the house will be listed by the Realtor at $765,000.00, That is what we have agreed upon though I have yet to sign the contract. I am currently clearing personal property and organizing the house for showings that would attract buyers.

Diane - Luckily I have about 10 very large boxes of Photos of the house, every renovation, birthday party, random moments. all well recorded as photography is a hobby we both shared. Just Today I was walking around the property, managing the plant life and got lost in thought of past and future, when I want nothing more then to focus on the present. 

So currently working around the property, clearing things out, working things out with my friend who was very interested in buying the property, and currently lives here.

Thanks

CommonCents

  • Handlebar Stache
  • *****
  • Posts: 2386
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #28 on: February 03, 2015, 12:33:54 PM »
Just an FYI, but putting a house on a market and then removing it (or lowering the price) usually results in a lower price than if you put a properly priced house on the market from the beginning.  There are many reasons for this - you're not attracting the right buyer with the wrong price tag, people think you're so inflated it's not worth negotiating, lost momentum, lost interest (most eyes on the property come in the first few days), people think they can bargain you even lower, etc.

I encourage you to look into this issue (even just google it!) and talk to your realtor about it.

Dicey

  • Senior Mustachian
  • ********
  • Posts: 13357
  • Age: 62
  • Location: NorCal
Re: Inherited a home at my personal rock bottom, Not sure which way to go.
« Reply #29 on: February 03, 2015, 02:18:35 PM »
Just an FYI, but putting a house on a market and then removing it (or lowering the price) usually results in a lower price than if you put a properly priced house on the market from the beginning.  There are many reasons for this - you're not attracting the right buyer with the wrong price tag, people think you're so inflated it's not worth negotiating, lost momentum, lost interest (most eyes on the property come in the first few days), people think they can bargain you even lower, etc.

I encourage you to look into this issue (even just google it!) and talk to your realtor about it.
^^This^^