On finding an investor for buying your own home (VD and GL please read).. - Posted by Pam

Posted by t on February 18, 2002 at 22:03:28:

I am needing to find some one to partner with on a home in Oak Ridge, Tn. Any suggestions?

On finding an investor for buying your own home (VD and GL please read)… - Posted by Pam

Posted by Pam on July 05, 2000 at 11:12:47:

I was reading your ‘debate’ on GL’s suggestion that one can try to find an investor to put up say 25% on the purchase of a house for the down payment in exchange for 50% of the profit on the house. It really seemed as tho you were saying the same thing, just using some slightly different terminology…so I really don’t mean to restart a debate, but that idea seemed like it might work for me! I DO know someone who would be very likely to do that for me, but I have some questions if you don’t mind. Is this a fairly standard way of doing the ‘little or nothing down’ method of buying a home? Are the figures of 25% and 50% just an example or is that what is commonly deemed fair? I could PROBABLY figure a way to buy my own home using more conventional methods, but this might allow me to get a more desirable house. Are there any pitfalls to watch for that I might not be seeing (for myself or for the investor)? I fully understand that profit can never be guaranteed in real estate, but if we choose wisely, the possibility of profit sure seems likely. Don’t banks require that you PERSONALLY put up a certain percentage though so that you have your own money invested? I recall buying a home a few yrs ago and we had to prove that the down payment money was our own. What does this do for the taxes on interest for both parties (if anything). This is just a new idea to me, but sure seems like it could be great for us! Thank you

What if real estate doesn’t go up? - Posted by GL

Posted by GL on July 05, 2000 at 18:34:04:

This seems to be a common question in this thread, especially by those who have never invested in real estate before. Yes it is possible for real estate to not go up, in fact it sometimes goes down. But this is not something the experienced investor worrys about very much.

Now what do you tell someone who says ‘What if it doesn’t go up?’

That reminds me of a story about Jimmy Durante. Do you remember Durante the slapstick comedian with the big ‘schnozzola’? Well he was rehearsing a sketch for a revue with a group of actors. One of them was a young lady with little or no experience on the stage. At a certain point Durante said “Now here you deliver your line, wait for the laugh, then sit down on the chair”.

The girl said “What if they don’t laugh?”

Durante said “Don’t worry, they’ll laugh.”

“But what if they don’t? What if one night we come out and do the sketch and no one laughs?”

And Durante said, “In that case, we’re all in the terlet together.”

Re: On finding an investor for buying your own home (VD and GL please read)… - Posted by GL

Posted by GL on July 05, 2000 at 18:18:20:

Hi Pam,

It was only a suggestion, to give you sn idea. You can change it around to suit you, your investor, you can make up anything between you that you both think is fair, and that you can agree to.Normally we think a partnership means a 50/50 share but it could be anything you please. I thought 50% of the profits for 25% of the investment was a good deal but all the people with no money thought I was “nuts”. The only one to agree with me was the rich guy LOL.

I have done similar deals myself and I know others have too. Usually it involves a relative or old friend but it doesn’t have to. It can be a straight business proposition with no favors asked.

In the original debate a certain doctor and investor said he would be happy to do a deal like that with a perfect stranger, provided it was in his town and the papers were approved by his lawyer. I can forward the email he sent me if you like.

Yes banks want to know where the down payment is coming from. In the case of a partnership like this if ONE of the partners is putting up the money that is perfectly OK.

I will not comment on the legal and tax aspects. You and your partner should discuss the matter with a lawyer and an accountant before you sign anything, so you can set it up in the most beneficial way. If your investor is in a high tax bracket and you pay hardly any taxes at all it is possible to set things up so he gets the lion’s share of the tax benefits.

Good luck and I hope you are happy in your new home!