Family Loan for Down Payment on rental property

2 Replies

Hello,

I'm planing to borrow money from my cousin for a down payment on a rental property, and the rest of the money will be come from a bank.  My concern is that if something happened to my wife and I, my cousin would not get his money back because my collateral from the rental property would go to the bank. I don't want to be put his name on the title of the home but I also would not want him to loose his principal if my wife and I suddenly passed away. Is there anyway where my cousin could automatically stay with the home beside the bank and decide if he wants to keep renting or sell it if we died and the title of the home and loan gets transferred to his name?

Thanks,

Originally posted by @Horacio Gutierrez :

Hello,

I'm planing to borrow money from my cousin for a down payment on a rental property, and the rest of the money will be come from a bank.  My concern is that if something happened to my wife and I, my cousin would not get his money back because my collateral from the rental property would go to the bank. I don't want to be put his name on the title of the home but I also would not want him to loose his principal if my wife and I suddenly passed away. Is there anyway where my cousin could automatically stay with the home beside the bank and decide if he wants to keep renting or sell it if we died and the title of the home and loan gets transferred to his name?

Thanks,

Horacia, interesting question. Obviously you care about your cousin but, honestly, it’s a bit of an odd question to be concerned about the death of you and your wife happening [somewhat simultaneously]. Do you have will that stipulates what happens to your assets, accounts, etc. if you pass away whereby your cousin is paid once your estate is liquidated? Maybe a more important question to consider; are you sure that you want to take out 100% loan on the investment?

Updated over 2 years ago

Horacio - sorry for misspell on your name

if you die... the property goes to whoever you will it to.  You can will your cousins portion to him, and then he will get whatever its worth after the lien is paid off, followed by your natural heir.  The bank doesnt just GET the house because they have a lien on it.