What to do with 150k cash.

Question

I need help.  My family owns a property in Illinois, paid off.  They want to buy a property in Ca.  so they want to sell it to get enough for a down payment. They ask me lend them the money.  I have the money to pay for the IL house cash. The question is, do I buy the property myself with a lender? Do I just keep it (saving on the closing costs) and rent it? Do I sell it and so that I can collect my money? What would you do and why.  Any help would be greatly appreciate it.

Theresa Harris · Answer

If you can use the money as a down payment for the house and get a mortgage for the rest, do that as it lets you do more with the rest of the  money.  If you are buying their house, whether you buy it with a loan or cash, they still get the same amount of money from the sale of their home.

Luis Barcenas · Answer

@Aaron K.That is the plan, lend them the money and collect it back when the property sells.

Luis Barcenas · Answer

@Twana Rasoul they don't qualify for a loan. We are in the process of putting on sale.

Aaron K. · Answer

IF and that is a big IF you want to lend money I'd do that and then expect the return when they sell the property, that way you'll have a commitment to be paid back and you aren't taking the same risk as buying their current property.  It could also be the case that they want you to lend money in addition to what they'll get for their current property.

Twana Rasoul · Answer

@Luis Barcenas Once they have the down payment for the house in CA do they have the income to qualify for the loan? what type of property or price point are they looking at? I assume it was owner occupied home so they would not owe capital gains? otherwise they should consider a 1031 exchange.  What's holding you guys from just putting that property on the market? or depending on what the house is worth and if they need the money for a short period of time they can get a Heloc until they sell?