Anything Can Be Divided


Owner has older duplex with $30,000 appraised value and $18,000 first mortgage.
Tenants have lived in both units for several years.


Owner needs cash.
There is limited availability of financing for investment property.
No market for older duplex in this price range without carry-back financing.


Owner checks subdivision regulations and obtains survey dividing the Duplex into two separate parcels (cost of survey = $1,500). Attorney creates common wall agreements. Owner sells Unit “A” to tenant for $20,000 with $2,000 in “painting credit” as down payment and assumption of existing first mortgage.

Lender releases Unit “B” from first mortgage. Owner sells Unit “B” for “painting credit” as down payment and $18,000 new first mortgage from same lender.


Owner sells $30,000 duplex for $40,000 gross sales price ($34,500 net after expenses). Owner receives cash instead of carry-back financing.
Tenants purchases own home with no cash down payment and no change in monthly payments.
Lender changes existing investment loan into owner-occupied loan. Also, lender makes new owner-occupied loan.

P.S. From the above property values, you might have already guessed that this formula has been around a long time.

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