JV Question - Allowing both Investors to be on Title

[Nir]

Hi,

A question about JV where 2 investors buy a property (say 4-plex):

Assuming investor 1 easily qualified for a mortgage and the bank allows him to be on title based on his strong application.

now what if BOTH investors want to be on title? Will a "weighted average TDS" be calculated by the bank for both investors in order to make the decision whether to allow both investors to be on title?
OR
Will the bank usually have no issue putting BOTH investor 1 and investor 2 on title based on investor 1`s strong application and approval?

In other words, to allow both investors to be on title will the bank require the investors to: 1. each apply SEPARATELY or 2. Apply TOGETHER as one application or 3. be OK with an application from only ONE OF THE INVESTORS (the stronger application)?

THANKS.

 

[RobMacdonald]

The investors do not have to qualify individually. In most cases, the incomes and expenses for each applicant will be combined and qualified on that basis.

What does get interesting is when it will qualify in one name, but then not qualify when you add the second borrower. It doesn`t make complete sense to me because if you would approve it in one person`s name, what`s the harm of a second signature for security.

But at the end of the day, `he who has the money, makes all the rules`.

 

[Nir]

QUOTE (RobMacdonald @ Feb 15 2010, 10:49 PM) `he who has the money, makes all the rules`.
Thank you Rob for the quick response!
Too bad by "`he who has the money" you mean the bank, not the strong investor in the example who also has money
Regards,
Neil

 

[OlegP]

Neil,

One way to do it is to create a holding corporation, which will go on title. The corporation just "holds" the property, while not having any financial interest, i.e. you can still apply profit/loss to your personal income tax. Naturally, you and your JV partner become the Directors of this corporation on a 50/50 basis.