If you had $275K to invest and were looking for a $350K property would you rather:
a). Take 5 years of up-front rent payments to cover the rest of the purchase price in exchange for i)forfeiting rents in years 6 through 9 (on average); ii) freezing the liquidity of the investment; iii) the possibility that you forfeit rent for years 10- 20 if the person survives into their 90’s; and iv) depend on the person with the free rent paying expenses for which they have no down side if they cease paying (other than possibly eviction… good luck with that)
or
b) Take a loan for 75K and have immediate cash flow of maybe $600 – 700 per month.
for me it seems like a steep price for the investor to pay for such little benefit. We’re talking $75K here.
