- Joined
- Oct 21, 2007
- Messages
- 181
We bought a property with a relative. We paid the down payment and legal costs, etc. and have 50% ownership. We are all on title. That was four years ago. He has been living there and paying all fees: mortgage, condo fees, etc. We have equally shared one special assessment and there is one more pending. He has been accelerating his mortgage payments and we agreed that any extra that he put on the mortgage would be his equity going out of the deal.
We would like to know how to calculate our share in the event of selling. If we sold now, we would sell at a loss, so we likely won't sell, but we would still like to know how to determine what we would do if we did sell.
Let's say the property was purchased at $250,000 and the down payment was $30,000. If the property sold for $200,000 what then? The $30,000 would be paid to us. If the outstanding debt on the mortgage was $200,000 and the sale of the property paid it out, would the tenant owe us $30,000 and that's it, or would we have to take some of that money and pay him for the loss? How do we calculate our portion of the loss? We realize that we would have to pay him for the increased equity over and above the basic mortgage payments.
If we sold at a profit, (let's say the selling price is $280,000) he would pay us our $30,000 and then we would split the profit of $30,000, but we would then have to calculate the extra equity and take that out of our profits, correct?
He is now thinking of buying a second property and wants to rent the first one. That gets even more complicated. If he finds a tenant whose rent will cover the mortgage and condo fees, then we thought that if he keeps a bank account with all the rent payments, then any extra that builds will be held for the property. Of course, if there is a vacancy, that would be his cost.
Are we looking at this correctly?
Thanks for your help. It has been satisfying helping him and also one other family member, but it does get complicated and we look forward to the day that we are free of both partnerships.
We would like to know how to calculate our share in the event of selling. If we sold now, we would sell at a loss, so we likely won't sell, but we would still like to know how to determine what we would do if we did sell.
Let's say the property was purchased at $250,000 and the down payment was $30,000. If the property sold for $200,000 what then? The $30,000 would be paid to us. If the outstanding debt on the mortgage was $200,000 and the sale of the property paid it out, would the tenant owe us $30,000 and that's it, or would we have to take some of that money and pay him for the loss? How do we calculate our portion of the loss? We realize that we would have to pay him for the increased equity over and above the basic mortgage payments.
If we sold at a profit, (let's say the selling price is $280,000) he would pay us our $30,000 and then we would split the profit of $30,000, but we would then have to calculate the extra equity and take that out of our profits, correct?
He is now thinking of buying a second property and wants to rent the first one. That gets even more complicated. If he finds a tenant whose rent will cover the mortgage and condo fees, then we thought that if he keeps a bank account with all the rent payments, then any extra that builds will be held for the property. Of course, if there is a vacancy, that would be his cost.
Are we looking at this correctly?
Thanks for your help. It has been satisfying helping him and also one other family member, but it does get complicated and we look forward to the day that we are free of both partnerships.