Posted by Josh on May 25, 2006 at 03:13:54:
That’s exactly what’s happening.
He wants to put the money down so he can get into a house with a lower monthly payment.
Property with no cashfloww - Posted by Josh
Posted by Josh on May 23, 2006 at 23:19:42:
My brother has been unable to get a loan. He’s trying to purchase a house at $150,000. He asked me if I could help him out.
So… I told him that if he is able to pay for the down payment, I will put the house in my name. He will be paying all closing costs. He will pay all rent and repair.
When we sell the house, he will get his down payment back (if the house sells for a profit) minus any rent or other fees he is deliquent on. I will get anything left. The contract will state this.
I won’t be getting any cashflow out of this property, but it’s an asset that could appreciate and I really don’t have to invest anything but my credit. I can afford to pay for the mortgage if he stops paying.
Should I do this deal?
Josh
No. - Posted by tampasteph
Posted by tampasteph on May 24, 2006 at 12:35:02:
I would not jeopardize your relationship with your brother by doing this deal. I am currently in a similar situation- used a friend’s credit to buy a property for me to live in and fix up. It has put a tremendous strain on our realationship. I can’t wait to sell and move on. This will be the first and last time I partner with a friend or relative.
Good luck,
Steph
Maybe I’m Missing Something… - Posted by Berno
Posted by Berno on May 24, 2006 at 11:00:54:
Does your brother want to put down a down payment and then rent the house? That seems a bit odd to me. Why not just rent from someone else and invest the $ elsewhere?
You sound like you are putting your name on the loan, putting up no money and then getting income from his rent payemnt AND any appreciation.
Interesting deal for all…
Re: Property with no cashfloww - Posted by dealmaker
Posted by dealmaker on May 24, 2006 at 06:42:09:
Mike is spot on here! This is a loser all around, lose money and lose the friendship of a brother.
Do your due diligence on the ppty, can it support the debt service, maintenance, allowance for vacancy and OPPORTUNITY COST of the out of pocket? Although the title of your post implies that it can’t!
If it can, and looks like a reasonable deal, buy it yourself and offer your brother a birddogging fee, or a L/O. If it can’t support the costs, walk away and DON’T lend your brother any money.
BTW, how old is your brother and what is his financial situation that he can’t float a $150K deal?
dealmaker
Re: Property with no cashfloww - Posted by Mike-OH
Posted by Mike-OH on May 24, 2006 at 05:32:08:
NO! Never do business with a relative. This is the fastest way to turn a friend into an enemy. I’m also concerned with this sentence of your post: “When we sell the house, he will get his down payment back (if the house sells for a profit) minus any rent or other fees he is deliquent on. I will get anything left. The contract will state this.” To me, this says that you don’t really expect your brother to make the payments. If he’s a deadbeat, then you’re enabling his lifestyle by helping him “buy” this house. Sometimes, tough love is the truly compassionate way to go. Also, since you are getting any profit from the eventual sale of the property, your brother isn’t really enjoying the benefits of “buying” a house. In reality, he’s just renting from you.
Good Luck,
Mike
Re: No. - Posted by Fred
Posted by Fred on May 25, 2006 at 21:47:08:
I have to agree with this statement. Some people will tell you that it is ok to deal with friends and family, but I can tell you this…even if only 1 in 1000 deals go bad with them, that one time will cost alot more than money. Definately do not do buisness with friends/family unless you don’t particularly care about that relationship in the future. I know this is off subject, but i’ve seen this trap set countless times.