Being our son's mortgage lender initially

[John Fierke]

Our son and daughter in law live in a mobile home (don't own the land), decent credit score but average income. We want to give them a leg up by loaning them the money to get them into a house (in need of rehab) sooner rather than later. Then down the road (a few years maybe), once they're more established with careers and credit, and rates and property value are right, they could transition to a conventional lender.

House Details : 3 Bed, 3 Bath 1,720 sf. Original asking price $215k, 73 days on market, plan to offer $175k. House has been a rental for decades, neglected. Plan to spend $40k in rehab.

So those are our thoughts. When that day comes, how would we recoup the remainder of our loan?  We'd also like to write something up so that we can recoup as much of the rehab costs as possible if the house appraises adequately?

Thanks,  
John

[Chris Seveney]

Quote from @John Fierke:

Our son and daughter in law live in a mobile home (don't own the land), decent credit score but average income. We want to give them a leg up by loaning them the money to get them into a house (in need of rehab) sooner rather than later. Then down the road (a few years maybe), once they're more established with careers and credit, and rates and property value are right, they could transition to a conventional lender.

House Details : 3 Bed, 3 Bath 1,720 sf. Original asking price $215k, 73 days on market, plan to offer $175k. House has been a rental for decades, neglected. Plan to spend $40k in rehab.

So those are our thoughts. When that day comes, how would we recoup the remainder of our loan?  We'd also like to write something up so that we can recoup as much of the rehab costs as possible if the house appraises adequately?

Thanks,  
John

 you would want to treat them like a bank would. Give them a note and mortgage against the property with an amoritization schedule. Use a title company or attorney to create all the documents and go through the process. Then after they close on the loan have the loan serviced by a professional servicing company to track the payments, handle escrow and all the end of year tax forms.