Skip to main content

Interesting Way of Obtaining Ownership and Brand New to Real Estate - Seeking Advice

Been helping a friend get rid of a lien on his home for almost 10 years so that he could take advantage of the low-interest rates. Fast forward to today, we missed that train but on the upside, I was able to get rid of the lien which was about $30k worth of debt for nothing but my time in the 20-30 calls over 13 months.

As gratitude, he wants to give me 5% equity in his home which has about $580k in equity ($900k value; $320k mortgage). He also wants me to be "partnered" up with him since I gave him "good" ideas on what to do with his existing equity and the property. Pretty basic things like building an ADU in the back which we got quoted for $100k and he then can live in that since he is single. Rent out the front house for about $4800.

The $100k will be loaned from a family member of his and repaid once we refinance. Once the front home is rented for a couple of months we will explore a cash-out refinance. My plan is to refinance for $720k, pay off the $320k mortgage, the $100k loan for the ADU and have the remaining $300k to invest into a new property.

$200k would be put down for approx for a $1M home, $100k towards another ADU in the back. We will only be buying a property that can sustain at least a 400 sqft ADU, but ideally, we would like to go upwards to be able to hold a 1000 sqft ADU.

*btw these numbers are very close to actual numbers just rounded for ease.

** also note that I understand there are hidden fees and do intend to scale everything back for us to have at least $50k at all times during this process in case of emergencies. We also do have our own individual savings well into the 6 digits so we aren't too worried of an unexpected repair, but we do hope to not have to inject personal capital and simply use this one home and its equity to invest together.

So my questions to all of you are:

- what is the best way to document my 5%? I would prefer there be no taxable event and unsure if this is a gift or in a way earned through my work? Past work of getting rid of the lien, future work in working with contractors, real estate agents, property managers, etc.

- Do I start an LLC for this venture between my friend and me? Finances will be handled by me and rental income will be flowing through a joint account.

- Open to any other general advice! Here to learn.

submitted by /u/DigitalBucks
[link] [comments]

source https://www.reddit.com/r/RealEstate/comments/zx5vo9/interesting_way_of_obtaining_ownership_and_brand/
Labels:

Comments

Post a Comment

Popular posts from this blog

North Carolina – “One to Buy; Two to Sell”

I realize I will likely have to contact a real estate attorney but also hoping to hear insights and experiences from others! I have a house in NC that I bought by myself in 2009, and paid off, in full, in 2022. I got married in 2023. My spouse and I have not lived in the house as our "marital residence". We have maintained separate residences even after we got married. (That a separate topic!). I am now selling this house. Realtors have told us that my husband has to sign the deed at time of transfer but I am not convinced since the house has not been our marital residence. The realtors like to use the phrase "one to buy; two to sell", which seems like a broad-stroke statement which is not applicable under all circumstances. And of course, the realtors don’t realize the details of my specific circumstances: I purchased and paid for the house in full prior to marriage Only my name is on the deed And most importantly, we have never lived in the house as a marit...
Post a Comment
Read more

Question With Tricon "Pending ID".....

My wife and i, along with 2 other peopl applied to rent a house, and our application says "Approved, Pending ID". Anyone else know what that means? Do we pretty much have the place or are we missing something? submitted by /u/Itskrueger [link] [comments] source https://www.reddit.com/r/RealEstate/comments/1orixqj/question_with_tricon_pending_id/
Post a Comment
Read more

Aren't comps/CMAs useless with buyer credits at close happening now?

I'm looking into buying a new construction townhouse in my HCOL US city. I'm seeing builders offering interest rate buydowns worth $20k-$60k on $800k homes (rather than just lowering prices) in order to keep their comps high for their other units, now that buyer demand has been declining. I asked my agent about these, and he said these buydowns aren't even the full story: buyers can write all kinds of other credits into an offer, like their closing costs, prepaid sewer fees, etc. Apparently cash buyers can just write in a "buyer credit at close" for any amount in their offer. So a new townhouse that appeared to sell for $800k in the MLS might have actually been a cash offer with a $100k+ buyer credit at close, meaning the buyer only spent $700k or less in total, but to the rest of the world they can only see the $800k! So that made me realize I can't trust comps/CMAs for other new construction townhouses. The sales prices could be way lower than they appear...
1 comment
Read more