Seeking to Purchase with Nothing Out of Pocket - Possible?

Question

I may have the opportunity to purchase a smaller condo from a relative - quite simply put, she doesn't have the know-how or appetite to manage it as a rental and wants to be rid of it. The only way this will work is essentially if neither one of us has to pay anything out of pocket. I know that it may require some creativity here, but is there a way to make this happen? Please note: I have a great credit score and DTI ratio, a down payment is out of the question unless I borrowed from someone else - so basically a down payment is out of the question.

Welcoming all creativity here...thoughts?

Steven J. · Answer

Subject 2

This is where you buy the property subject to the existing mortgage. You'll have to be careful because the bank can call the note due if they notice that ownership has changed hands but the old mortgage hasn't been paid off. I've never done one of these, but from what I understand is you need to first put the current seller and property into a personal property trust as this does not violate the 'due on sale' clause. You are allowed to put a property into a trust for estate planning purposes and although ownership does change hands the original owner is still the owner of the trust and the bank shouldn't call the mortgage due. Once this has been done transfer the beneficial interest of the trust to yourself and you start making payments, via the trust, to the bank on the original loan. Keep in mind, it is of utmost important that you make every payment in full and on time because it is someone elses credit on the line.