When it’s time to sellout, take a cruise or step back and smell the roses — Owners of small income-producing properties, like myself, will typically sell to the next generation of up and coming investors. The problem we face is the very same problem we once had starting out. It’s called, lack of cash. Funny how some things never change!

Down payments are traditionally less for older income units – even when they’re well kept and full of smiling tenants! 10% cash down is normally what most investors expect to pay. Many young start-outs with tons of energy to burn feel fortunate to come up with 10% cash. My problem is not really the low down pay­ment — It’s the matter of protection I’m concerned about.

When I sell property for a small cash down payment, I insist on securing my mortgage or note with not just the real estate I’m selling – but also, another property the buyer owns or quite often, his relatives own! For example, a young man wishes to purchase my small apartment with 10% cash down. He doesn’t own any other property, but Daddy agrees to help his son get started. Daddy owns a $200,000 home with a $100,000 first mortgage.

If I’m selling a $100,000 apartment for $10,000 cash down – I will simply record a 2nd mortgage on Dad’s house for an additional $10,000 as added security for me. No payments are required from Dad – and I will generally reconvey (release Dad’s house) after 60 months of faithful payments to me from Junior. Meanwhile if Junior goes bonkers – Dad’s house is on the hook for $10,000. Ain’t Dad great or what!!