Joint/partial ownership

[rhodas]

Can anyone help with this...........

We have a family member that would like to get into the property market by purchasing four fifths of our principle residence. We would remain one fifth owner as an investment (counting on that equity will continue to grow). There would be no income from this one fifth share but this property has potential for future development.

We would like to purchase another house but I`m not sure how this arrangement may benefit us. Does the equity count towards our next property? Does their four fifths go directly to our next property as a down payment or do we have to pay our existing mortgage before we purchase another property? I believe our mortgage is tranferable....Should we remain on title as joint owners or do we just have a legal agreement that we have a share? I assume that once this property is sold we will have to pay capital gains on any increase in equity?

Looking forward to hearing from anyone that may be able to offer some insight into this............

 

[UTCVenturesLtd]

QUOTE (rhodas @ Jan 28 2008, 08:23 PM) Can anyone help with this...........

We have a family member that would like to get into the property market by purchasing four fifths of our principle residence. We would remain one fifth owner as an investment (counting on that equity will continue to grow). There would be no income from this one fifth share but this property has potential for future development.

We would like to purchase another house but I`m not sure how this arrangement may benefit us. Does the equity count towards our next property? Does their four fifths go directly to our next property as a down payment or do we have to pay our existing mortgage before we purchase another property? I believe our mortgage is tranferable....Should we remain on title as joint owners or do we just have a legal agreement that we have a share? I assume that once this property is sold we will have to pay capital gains on any increase in equity?

Looking forward to hearing from anyone that may be able to offer some insight into this............

I really dislike deals with family. What if they decide not to pay the taxes, mortgage payments, etc? Who pays for an appliance repair or replacement? I came across thinking about doing a a 50 50 deal to help my daughter and other half get into their own house, my principle residence too. Family members can be the worst people to deal with because they are family! Better to cut loose of the property and move on. Maybe the family member can find someone else to take a partial ownership position with? You can enjoy the equity building up in your new home and it is all yours. One thing that you can do for the family member since it is a private sale, is to give them a gift of what you would have paid out for a realtor`s fee which can help them with a partial downpayment to buy it! One cool thing about real estate, is the many creative financing ways of doing deals! The trick is to try and get a win win situation going for both parties!

 

[loriintaiwan]

QUOTE (UTCVenturesLtd @ Jan 29 2008, 08:50 PM) I really dislike deals with family.

I agree. I`m currently being "screwed" by my own brother for over $30,000. I hope he`s the mailman`s kid!

 

[PeterKinchMortgageTeam]

QUOTE (rhodas @ Jan 28 2008, 08:23 PM) Can anyone help with this...........

We have a family member that would like to get into the property market by purchasing four fifths of our principle residence. We would remain one fifth owner as an investment (counting on that equity will continue to grow). There would be no income from this one fifth share but this property has potential for future development.

We would like to purchase another house but I`m not sure how this arrangement may benefit us. Does the equity count towards our next property? Does their four fifths go directly to our next property as a down payment or do we have to pay our existing mortgage before we purchase another property? I believe our mortgage is tranferable....Should we remain on title as joint owners or do we just have a legal agreement that we have a share? I assume that once this property is sold we will have to pay capital gains on any increase in equity?

Looking forward to hearing from anyone that may be able to offer some insight into this............


Dividing properties into portions owned by different parties tends to create alot of challenges. How is the financing divided, who will be responsible for it? (the bank will not allow divided interests when it comes to mortgages), how will title look? How will they access the equity? How will you? What about taxes, utilities, etc... Its really important to ask yourself for what purpose you are doing a deal like this - can you accomplish the same benefit by doing a different kind of deal?

It would probably be much easier and much cleaner if you looked at doing a more traditional JV with your family member - for not much more money, they may be able to get into a revenue property and have some rents from it.