Welcome!

By registering with us, you'll be able to discuss, share and private message with other members of our community.

SignUp Now!

Buying challenge

David Chien

0
Registered
Joined
Feb 25, 2009
Messages
67
I would like to ask for some advice on this situation:
Grandparent had willed their home to their 3 daughters, and one of the daughter will like to buy out the other two, so she can pass on to her children who are in their early twenties. Due to the recent mortgage qualification stress test, it is very difficult for them to obtain the financing through normal bank qualification. This property is a condo in Vancouver, priced around $700k. All suggestions are welcome. Thank you!
 

Martin1968

Frequent Forum Member
Registered
Joined
Jan 22, 2017
Messages
235
The missing piece is what the daughter who wants to purchase would qualify for. She doesn’t qualify for anything? Or maybe not the total of appr $466K. If she would qualify for let’s say 300K then maybe the sisters can each arrange to loan her $83K. All depends on the willingness to help out family, and the other 2 sisters’ appetite for getting the cash now.
Other option is for her to include her early twenty kids to be included on the mtg application, if they have income on their own.
It would be worth it to maybe sit down as a family to discuss and then check your options with bank, credit union or mtg broker.
 

Thomas Beyer

0
REIN Member
Joined
Aug 30, 2007
Messages
13,881
Sometimes selling is the best option to avoid any family conflict.

Presumably she needs a 66.67% mortgage of the property value to pay out her 2 sisters. That can be obtained with additional owners or co-guarantors, say daughters, husband, uncle, aunts, friends etc ..


Sent from my iPhone using myREINspace
 

David Chien

0
Registered
Joined
Feb 25, 2009
Messages
67
Thank you Thomas!

She had about $100k that can be put into this deal to pay off her sister, and to obtain a financing, either private or with a bank.
Will any of the JV strategies like AFS, LTO, among others that can be used in this. They are blessed with helpful family members who can help each other out if there is a way to protect all parties. Thank you again.
 

Matt Crowley

0
REIN Member
Joined
Dec 14, 2013
Messages
980
If she has some qualification ability then just use the 33.33% equity position as the downpayment and pay out the other two daughters at the average of two independent appraisals. Just need a legal structure to make that work.

Don't use AFS, LTO, JV...just keep it simple.

If she doesn't have enough qualifying ability at 33% down, then probably she shouldn't be buying this place. If she wants to buy something she can't afford and suffer when interest rates rise, then you can get a co-signer and pay them for their guarantee.

Should just be a transaction with the help of a lawyer for the gift and transfer.
 

Martin1968

Frequent Forum Member
Registered
Joined
Jan 22, 2017
Messages
235
I would agree on the above. So she has 100K on top of her third? She is almost at 50% DP then.
Would think she should be able to get that financed one way or the other without any complicated constructions. Pay of your sisters and live happily ever after.
 

Thomas Beyer

0
REIN Member
Joined
Aug 30, 2007
Messages
13,881
I would agree on the above. So she has 100K on top of her third? She is almost at 50% DP then.
Would think she should be able to get that financed one way or the other without any complicated constructions. Pay of your sisters and live happily ever after.

Indeed.

Not paying but now living aka “mooching off the sisters” in a “fancy condo” surely makes for poor family dynamics at Christmas parties.

Instead selling and splitting cash and then buying something else is the better option probably.


Thomas Beyer, Asset Manager, Investor, Community Improver, Author, Father, Mentor www.prestprop.com
 

David Chien

0
Registered
Joined
Feb 25, 2009
Messages
67
Thank you Matt, Martin and Thomas for your clarification and suggestion.
Now that clears the path in getting the property into her name.
What other arrangement would you suggest when passing on this unit to her adult children. Will some form of JV or LTO be suggested ?
 

Martin1968

Frequent Forum Member
Registered
Joined
Jan 22, 2017
Messages
235
We don’t have the complete picture of what one is trying to accomplish, but I assume the kids don’t have an income on their own (yet)
Only thing I can think of is for mom (and dad) to hold on to the condo themselves and just rent it to the kids maybe? Once the kids can qualify on their own they can pay out mom and dad, or if mom and dad want or need to help out it can be done in stages.
All the other options wouldn’t be my cup of tea. Tell the kids to go out and work as hard (and smart) as they can, save money like crazy, be focused and when they get to the point they can come up with DP to buy it off them.
Nothing against helping out your kids though, but I’m a bit old fashioned in that regards. I believe in delayed gratification
 

Thomas Beyer

0
REIN Member
Joined
Aug 30, 2007
Messages
13,881
Thank you Matt, Martin and Thomas for your clarification and suggestion.
Now that clears the path in getting the property into her name.
What other arrangement would you suggest when passing on this unit to her adult children. Will some form of JV or LTO be suggested ?

You can transfer land into multiple peoples names, who either are joint tenants ( which essentially means two users but only one legal owner that have to both agree on a future resale) or own an undivided interest of 1/3 or 1/2 each (which essentially is a form of JV as each party can decide to resell their 1/3 or 1/2 share to others later without the other co-owners consent). Get some legal clarity on options here.


Thomas Beyer, Asset Manager, Investor, Community Improver, Author, Father, Mentor www.prestprop.com
 
Top Bottom