Options for home purchase

6 Replies

I am currently renting a single family home in Texas that will be up for sale in approx 4 months. I do not qualify for a loan alone for the house based on my income but have a sister willing to partner with me to purchase the house as an investment or consigner. I'm not sure what the best way to go about this is and am looking for suggestions. My sister currently has a paid off rental property and an existing home loan on her home that she lives in. We need guidance as to how to go about this. Should I apply for a loan and have her as a consigner ? How are taxes handled if we are both on the loan? Should we both apply for loans together to have the home as an investment property? If it is considered an investment property can I live in it? Should we take a loan on her current paid off rental property and use it as a down payment on this home ? Would that be considered a taxable gift? We are giving ourselves a crash course due to time limitations and are possibly confusing ourselves rather than learning what we need. I'm not sure what type of lender to go to for this situation, a credit union, a mortgage broker or a bank.

@Crystal Lee  

If you can't afford the house on your own, how will you be able to afford it with you sister on the mortgage? Are you planning to rent out rooms or something along those lines?

Your sister can do a cash out mortgage on her investment property for a down payment for this purchase. 

Medium prime lendingJerry Padilla, Prime Lending | [email protected] | 585‑204‑6923 | https://lo.primelending.com/jerry.padilla | NY Lender # NMLS #1084877

I currently have roommates and will in the future. what type of lender handles a cash out mortgage? A bank, credit union or mortgage broker? We want to avoid using a real estate agent.

Also, with the down payment from a cash out mortgage would make the payment manageable. Would using a cash out mortgage down payment from her make it a "gift" or is there an option to still be a coborrower or Investor for tax purposes

@Crystal Lee Can you please post the numbers (comps, ROI, NOI, CoC, cap rate) for us to be able to recommend whether you should even go for it? Because just not wanting to move is NOT a good enough reason to buy it! BiggerPockets is about helping people buy GOOD deals, not buying for the sake of it!

Your sister will not be "gifting" you anything if you are committed to pay her back, or if she is co-investor - and perhaps you shouldn't be asking her to "give" you something for nothing.

As for raising the rest of the dollars needed, are you listening to @Brandon Turner  right now? His insights into raising funds is very informative and may help you, and your sister. Look for his webinar "How to Attract Private Money To Fund Your Real Estate Deals". Cheers...

Originally posted by @Brent Coombs :

@Crystal Lee Can you please post the numbers (comps, ROI, NOI, CoC, cap rate) for us to be able to recommend whether you should even go for it? Because just not wanting to move is NOT a good enough reason to buy it! BiggerPockets is about helping people buy GOOD deals, not buying for the sake of it!

Your sister will not be "gifting" you anything if you are committed to pay her back, or if she is co-investor - and perhaps you shouldn't be asking her to "give" you something for nothing.

As for raising the rest of the dollars needed, are you listening to @Brandon Turner  right now? His insights into raising funds is very informative and may help you, and your sister. Look for his webinar "How to Attract Private Money To Fund Your Real Estate Deals". Cheers...

Brent, the OP is a first time home buyer. She doesn't know what you're asking. How could she know the CoC or cap rate of the property she is renting?

@Crystal Lee  Please post:  The property value (if you know it), the seller's asking/listing price (if you know it), and the rent you are paying.  Additionally, please post any rental income you are receiving from boarders or tenants.

How much cash on hand (available cash today) does your sister have for a down payment? Do you have any cash on hand?

@Crystal Lee I am aware that you are a first-timer, which is EXACTLY why I wrote in investor-speak! You NEED to become familiar with all the terms I used, if you aren't already. 

You NEED to think of your first home purchase as an INVESTMENT, not a shopping desire. Otherwise, you might as well go to that other website devoted to "How to buy what you want whenever you want it, regardless of how much it will be worth once you buy it" - called SMALLERpockets.com ! It's so good, soon all your money will disappear so quickly, you won't need any pockets at all !

But please, by all means, post the clear numbers that @K. Marie Poe requested. All the best...

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