New answers tagged

1

Calculate your debt to income ratio after the new mortgage. If it's too high, you shouldn't take any extra mortgage. How do you know what is too high? In my case, I'm young and have a rather high income from my job in the software industry. I'm comfortable with approximately twice my annual income minus taxes as loan. For someone who has an average income as ...


1

Your friend's CPA must be wrong, but that doesn't mean that your CPA is right: Having signed a TIC agreement, you cannot be compelled to create a JV just to enable you to file taxes. The IRS has a "come as you are" approach. The IRS does not go around forcing people to change their business arrangements. Seriously, they have enough to do without ...


1

The business of banks is banking Banks are good at it. The business of property managers is managing property. Banks are lousy at it so they don’t do it. Similarly banks don’t understand the business of mining, running airlines, operating gyms or managing professional sports teams. So they don’t do that either. The skills and talents that go into running a ...


2

There are many banks that do operate in the way you describe. The bank buying the house and you renting it from the bank and then paying an additional amount to purchase the house over time is called an Islamic mortgage or Islamic home loan. With an Islamic mortgage the bank becomes your landlord and because of the structure of the transaction, no interest ...


8

You are underestimating the costs and risks to the bank The basic idea here is that buying a house isn't a cost-free process, owning and renting a house isn't cost-free or risk-free, dealing with a delinquent tenant isn't cost-free or easy, and the bank doesn't get much value out of your happiness or housing satisfaction. Buying a house costs a lot of money. ...


4

First, when you buy a house with a mortgage, the bank does not "own the house until I've paid it anyway". You own the house from day 1, and you owe money to the bank. Practically, since the loan is secured by the house, the bank shares some of the risk of the house, in that they may lose if its value drops below your loan balance. But your down ...


3

The vast majority of home mortgages are sold to the government backed lending companies, so many lenders only deal with loans that conform to the standards that guarantee they can sell them. This means a certain percentage down, debt to income ratio, credit score, etc. Taking on your situation introduces more risk than their standard loans. You might find a ...


14

Simple answer, they are in the banking business not the landlording business. The same reason a coffee shop won't sell you a car even if there was some scheme where it benefitted them.


4

Yes, just like any other capital gains, they will offset, assuming they are sold in the same year. Note that with rental real estate you will pay depreciation recapture, and your basis is lowered by the depreciation, which makes it more likely that you'll have a capital gain.


0

Talk to the landlord. From his perspective, he is looking at receiving $9600 remaining on the contract, which is the amount you are looking at paying. After that, he will have a significant cost to get a new tenant in, and will likely have a gap in occupancy. Call those one month of vacancy and one month's rent of cost to get someone new in: $1600 of missed ...


1

Your thinking is way off. If he buys you out at 100k each, he started with 100k worth of the house and now owns a 300k house and is out 200k cash for no change. If he sells the house he is now +100k cash as are the two of you. This is the appropriate accounting if the house is worth 300k. The point that there are costs involved in selling a house is ...


0

Setting aside my opinion on whether or not this is a good idea, I think it's actually very simple. You keep track of amount paid for mortgage, improvements, and anything that increases the value of the house. If/when you sell, you total the amount you put in for the down payment and the other tracked expenditures, then divide by the total both parties put ...


0

A. You should not do this. B. You are talking about profit, but no guarantee of that. Could be a big loss. If you want to do it though, it's actually pretty simple: Each party (couple?) should put down the same amount of money and be equal owners, sharing equally in any (possible) later sales proceeds. Your brother should loan you $200k on the side, so that ...


2

Others have shown how to do the math correctly. I'll try to show where, exactly, you had it wrong. Lets break up the equations in your sentence: he theoretically gets 100k of his share from the property (yes, it’s still IN the property) and after buying us out he will be theoretically negative 100k. (100k-200k= -100k) But now he has another 2/3 of the ...


0

The fairest thing would be to form a kind of community (call it as you like), and be it only in the form of a shared account treat the downpayments of each couple as a contribution to that community Then pay a kind of "rent" 50/50 which covers mortgage payments, utilities and maybe a certain saving amount for repairs etc. How you treat the ...


8

You start with $2 million total inheritance. That means $1.7 million in cash, and $300k in the house. I think this is the part that you're missing - the house is part of the total inheritance, not anything on its own. You each get $567k in cash, plus a third share in the house. Then your brother buys you and your other sibling out. That's $100k for you, ...


0

It's completely bizarre that you are putting down different amounts of money. That would be "insane" and the only thing that can be said about that is: "don't do it." There is - simply - no way to price capital. Further - this shouldn't even need to be mentioned - this entire deal hinges on the overwhelming figure in the spreadsheet: the ...


0

You missed the initial balance in your calculation when he sells the house: Here it is in long form. Networth before: 0. Networth after he buys out siblings: -100k. 100k - 100k (Bankloan1 to sibling A) - 100k (Bankloan2 to sibling B) = -100k Network after he sells the house: 0 -100k + 300k (= 200k) - 100k (payback bankloan1) - 100k (payback bankloan2) = 0 ※ ...


15

This is very simple. The 3 of you need to split a $2M estate (or whatever the TOTAL value of everything is). So that's about $670k each. If one of you wants the house, then they can take the house worth $300k, plus another $370k on top of that. The other two just get $670k in cash. And that's it. Just divide up the total value (including all property and ...


5

Ignore the inheritance, and for a moment ignore the fact that your brother would be on both sides of the sale. You and your two siblings each own an equal third of a $300,000 property ($100,000 each). A buyer gives you $300,000 in exchange for the property. You now do not have the house, but you each have a third of the $300,000 payment ($100,000 each). So ...


27

Imagine if there was no money in the inheritance, just the house. However your brother has his own $200k account with money he saved from his day job. He starts with $200k, inherits $100k worth of house, total $300k. He pays you and your third sibling $100k each, now he owns an entire house worth $300k but his bank account is $0, total is still $300k. He ...


72

You’re thinking about it wrong. To make the maths easier, assume the estate has just $600K in cash and the $300K property. If you each inherit equally, you each end up with $200K and a third of the property. If one sibling buys out the others, then he ends up with the $300K property and no cash, and the others each have $300K in cash. So you all end up with ...


0

The phrase "verbal financial agreement" always makes me cringe! In truth there's no such thing, since it assumes all parties will be honest in their recollections of the details. There are so many issues at play with this question, such as where you're located, for starters. This has EVERYTHING to do with how this plays out in the end. Needless ...


2

Whether or not the spaces are shared seems to have little to do with your actual question, and I agree with the comment that you mixed past and future tenses. I don't know why you would wait until after the property has been purchased to start thinking about a profit-sharing agreement. The only real issue here is the down payment differential, which becomes ...


5

Fair is obviously in the eye of the beholder and whatever the four of you agree to is, by definition, fair. Were it me, I'd do something like this Initially, sister and brother-in-law own 500,000/ 2,175,000 = 22.98% of the house Initially, you and your partner own 100,000/ 2,175,000 = 4.60% of the house Initially, the bank owns the remaining 72.41% of the ...


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