Many people believe that the material we teach in real estate pre license courses is stuff that you really don't need to know except to pass the North Carolina real estate exam. The truth is, no matter what your profession, the more you learn, the more you earn.
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| Invest in Hendersonville, N.C. real estate |
Many years ago, when I had more energy than I had money, I wanted to buy investment houses and rental units. At the time I was a very active real estate broker in Orlando, Florida. I was constantly running into super bargain properties for sale. It was impossible to take advantage of all the bargains that I ran across.
I would attend seminars about investing in real estate. The guru at the front of the room would give us ideas. I would come home from the real estate seminar and try to make the ideas work.
At one seminar that I attended, I learned about tenancy in common. I went out and found a nice rental house that was for sale at a bargain price,$40,000. It required an $8000 down payment. I did not have $8000.
I approached a friend, a person that knew me and trusted me, I asked him if he would like to buy this house with me fifty fifty. He would put up the $8000 for his half. I would agree to make the payments, manage the property, maintain it for my half. His name was on the deed. My name was on the deed. We were tenants in common. If you are soon taking your North Carolina real estate test, you need to understand this.
If, during our ownership, I should die, my half of this property would descend to my heirs. If. during our ownership, my friend, Arnold should die, his half would descend to his heirs. If you owned a property jointly with a casual friend, isn't that the way you would want it to be?
In North Carolina, we have another type of ownership called joint tenancy. In a joint tenancy, if one party dies, that party's half would go to the other party. With tenancy in common, your half would go to your heirs, not to your partner.
What an opportunity this house was for me and for Arnold. I had very little money. I understood rentals. I was honest. I was ambitious. Arnold knew that about me.
Arnold had plenty of money. He had a desire for a safe place to invest that money. He did not have any inclination to work with working man type rental property. He was not interested in collecting rent and maintaining rental houses.
Arnold put up the down payment. I made the payments. After closing, I suspect that Arnold never saw that house again. About five years later, we sold that house for a nice profit. Arnold got his $8000 back and we split the rest of the proceeds fifty fifty. That is the deal we had made five years earlier. Any equity increase, we shared equally. Equity increased due to the house appreciating and principal reduction of the mortgage.
If you are young, ambitious, honest and energetic and you want to buy some rental property, find a friend that has money but does not relish the thought of dealing with rental house and tenants.This will benefit both of you. Don't take my word for it. Try it.
If your friend with money is reluctant to invest, find a better bargain. One of the concerns that your friend may have is that you may not live up to your end of the agreement. You make certain that that NEVER happens. If your kids are hungry and crying, you make the payments on that tenancy in common house. If you mess this up, you will never get a second chance. If you make this work, you can do it again and again . It is a great way to get started with rental houses or flipper houses.
If First Real Estate School can help you get started with a new real estate career anywhere near Asheville or Hendersonville, North Carolina, please call us at 828 440 1064
Great article! Question - since NC has joint tenancy, can you create a contract, will, or something that says that if you die your half goes to your heirs or is there no way around that?
ReplyDeleteDo not confuse Joint Tenancy with Tenancy in Common. In North Carolina, when you own tenancy in common, your portion will pass to your heirs upon your death. When you own joint tenancy with someone else, your portion will pass to the someone else upon your death. There are not many people that you want to own joint tenancy with.
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