Dad as investor?
BP Question Dad as investor
Background
I used to live in NYC and got a job in NJ 4 years ago. My father, generous man that he is, promised me a 20% down payment if I moved to NJ. He did this as an enticement, as I never wanted to leave NYC.
I made the move; he didn’t pay.
I changed my tune as I entered my 30s in 2011, got married, kid, etc, and I do not miss living in Manhattan.
I ended up paying my own down payment, no complaints, except that he reneged. Although he had the money, I never did actually expect him to follow through on his promise. He’s of the sink or swim school.
Anyway, he’s offering once again to pay a down payment, and this time I believe it’s coming from a genuine place. He’s fallen in love with my daughter and he wants to provide for her. I currently live in a 1.5 bedroom condo in metro NJ, which he believes is too small for my wife and child. I’m slowly starting to agree.
I’m looking at a multifamily in the New Jersey Metro area, 4 units, with a commercial property.
2 two bedrooms, and 2 1 bedrooms, as well as an existing deli.
I’ve only seen the listing online, and I’m waiting to get back to NJ from Austin to see the property. (I’m in the airport now).
The catch? The property is 5 minutes from Manhattan, and my parents plan to stay in one of the 1-bedroom apartments. They’d like to be able to stay there whenever they want. So 1 of the apartments can’t be rented.
The other option would be the purchase of a 3-bedroom, where 1 bedroom would be reserved for my parents.
Questions
- 1.What is the most appropriate way to accept my father’s money as a 30% down payment on this property? There are large tax implications with him gifting me $225,000.
- 2.Is now the appropriate time? I plan to house hack the units, but I have my hands full with the restaurant. I hope to: move from my current condo and rent it out (nowhere near the 1% rule, however), move into one of the 2-bedrooms, rent out the other 2-bedroom, collect rent from the commercial property, reserve 1 bedroom for my parents, and renovate the other bedroom and put it on the rental market in a couple of months.