Refinance to buy out partner.

4 Replies

I own with a partner a one bedroom condo in Ft Myers Fl. The condo is fully paid for and is cash flowing nicely My partners is wanting to sell her half to me for $60K, the 1/1's selling @ $130k so this is a fair proposal. My intent is to convert to furnished short term rental. I have two short term rentals in the same complex and they do great with traveling nurses (my niche). Look to finance the 60k. I have the cash available but it is in Roth IRA so would take a big tax hit going that route but this can be used to leverage the loan Are there and lenders that work with this scenario for such a small loan.

Is the condo complex warrantable? 51% owners, no lawsuits, and has sizeable reserves?  We don't use Short Term Rental income to cash flow, appraiser provides market rents. To answer your question lenders need to know: your middle FICO, what you show on your IRS net income past 2 years, no forbearance, what is actual comparable sales value of recent sales with mortgages NOT cash ones, vesting proposed, how cooperative are you

Promotion
BiggerPockets
The one-stop-shop for REI
Find Local Home Improvement Pros!
Check out our network of trusted, local contractors for all of your home improvement projects.
Find a Contractor

@Fred Cannon open up a self directed Roth IRA which allows for alternative investments such as RE to be held. This allows you to use Roth money with no tax consequence. Transfer existing Roth to self directed Roth .Purchase buy out portion with Roth money in new Roth titled in name of new Roth( Fred Cannon Roth IRA). Need to have checkbook Roth IRA for bookkeeping purposes to keep income and expenses segregated in same % as ownership, personal % vs Roth %.

@Marc Rice. That's a good idea but it still does not relieve me of taking cash from Roth but I could spread it out over two years instead of one. I retired this year so my taxable income is much lower. I will make that approach to see how that works