Am considering a JV with a potential buyer...

[Lucas]

Hello again,

I posted about a buyer that did not have the downpayment necessary to purchase my home. This is still the case and it looks like 0 down cashback is NOT an option...nor is "nestbuilders"...although that is a fantastic program!!!

The home is a new SF in Spruce Grove, Ab.

I am now exploring the JV option. I want to have them assume my mortgage becuase I am sure they would qualify. I then want to refinance the property to a 90% LTV, (its currently at 75% LTV) keep the cash that we pull out and retain a 50% equity position. They would pay the mortgage, taxes, utilities and "wear and tear" maintenance. We would split the cost of any improvements (ie. basement finishing, garage etc...) as well as any unforseen major repairs (ie. roof, furnace, flooring etc...).

The candidates are a young-ish couple who have high paying jobs, decent credit (low 600`s beacon), a strong employment history and not a massive amount of high interest debt. However, they don`t have a downpayment.

Does this seem like a risky strategy and how would you structure this deal if it was in front of you. (ie. my security, equity percentages, cost-sharing etc.)

Btw, it is necessary that I am removed from the mortgage as I need the room to move onto another deal...

Thanks in advance,

Lucas

 

[Thomas Beyer]

consider: gift them the money .. have THEM qualify for mortgage .. and have a JV agreement too ..

risk is : money is gone and they do not close ..

 

[Lucas]

QUOTE (thomasbeyer2000 @ Nov 13 2008, 09:48 PM) consider: gift them the money .. have THEM qualify for mortgage .. and have a JV agreement too ..

risk is : money is gone and they do not close ..


Thanks for the reply Thomas...

I was told by a broker that only family can "gift" money.

The reason why I like the assumption option is that it won`t be any cash out of my pocket...only equity from the house...AND I still retain 50% stake.

What do you think about the maintenance and repairs arrangement. Considering that they are unable to purchase a house of this quality and they REALLY like it...am I being to generous?

On the flipside consider that after the LOC (which they will pay the interest for...) I will only have 10% equity in the property (approx 30k). Maybe 50% is too much???

thoughts??

Lucas

 

[wealthyboomer]

Just another thought on the downpayment option.

Here is something that Pointe-of View has been doing:
Pointe of View stepped in by providing $20,000 to buyers, who must then invest that money into an RRSP. After 90days, that money goes right back to Pointe of View as a down payment, making the final interest rates on the mortgage affordable.
http://www.pointeofview.com/program_eases_...yment_woes.aspx