Case 4 - Buy a fourplex, live in one unit and rent the other three
You sell a home for a client in Yorba Linda who escapes financial problems - including a nasty divorce - by paying off a sizable mortgage and after settlement with his ex has $400,000 to begin a new retirement life. He has $2,800 per month in social security and a modest pension. He mentions he'd like to downsize to a new place anywhere but Yorba Linda and somehow increase his monthly cash flow for the rest of his retirement.
Solution:
You do research and find the home below (actual description in zillow March 3, 2016):
28878 Calle Del Lago, Murrieta, CA 92563 For Sale
Studio -- baths 4,000 sqft $649,000
A rare find. This two story 4-plex has not come up for sale since 1998. All units are in great shape. Two units have updated baths and even one unit has a brand new kitchen. Each unit has a single car garage, as well as extra parking in the rear. The units have two beds and 1.5 baths, and are quite spacious. There have been recent updates to AC, water heater and the roof. This building has had a fantastic rental history and a landlord that paid attention to repairs and maintenance. This won't last!! This would be great for an owner/operator to live in one unit and rent the others.
You help your client do research and determine that similar apartments are rented for $950 to $1,050 in the area (actual search). You explain to your 65 year old now single client, that the Reverse Purchase enables him to buy the house $649k fourplex with the net from his Yorba Linda home. In this case he can put $389k down and uses the Reverse Purchase for the balance of the $649k price without creating a monthly mortgage payment. You explain that the home must be his primary residence, however, FHA guidelines allow for 1-4 unit buildings to qualify. While he must consider taxes, non-vacancies, HOA fees and other costs of ownership, your knowledge of Purchase Reverse Mortgages will enable him to generate $2,850 to $3,150 in gross income for the remaining 20 - 25 years of his retirement.
You get a sale AND you are a hero!