Advice re owning a house in cash affecting future investments

6 Replies

I am looking to buy a house with cash. For technical reasons, my cousin who is a real estate investor, has offered to buy it for me under his name. Would this transaction pose any problems for his credit record or create any other issues with future purchases made by him, assuming that future purchases would require him to get a mortgage?

Let me re-write what you wrote to be a little more accurate & to be sure I understood the question correctly:

I am giving my cousin some money. My cousin will be buying a home all-cash using the money that I gave him. My cousin may at some point elect to rent the home to me. Will this screw with his future ability to get a mortgage?

Assuming that is an accurate re-write, my answer: Assuming he (the homeowner) honestly reports any rental income from you (the tenant) when he files his taxes, no it will not jam him up in any way.

No the question was not about future potential rental, just owning a house cash, would that screw anything up?

Meaning owning a house in cash under his name?

@Eli Gilbert

Any asset owned that has potential liability associated with it can affect the holder of legal title credit. Further, owning a property with no liens can be a magnet for lawsuits. People always think that they will be able to hide ownership of assets by placing the asset in the name of a friend or relative, while this can work, many problems , for both parties can occur. Better to form a LLC under the laws of a state which does not require disclosure of the members names. Have your cousin as the manager, while you anonymously be the sole member.

Assuming there is no rent generated, property taxes and insurance payments on the property will presumably be in the cousin's name.  These are annual liabilities with no offsetting income.  I can't speak for what banks or credit agencies consider but the there is a potential hit to your cousin's income statement here and possibly to his personal balance sheet (if the home does not appreciate but some similar amount annually).   

One solution is to pay your cousin "rent" in the amount of property taxes, insurance and to cover his income taxes from the "rent" you pay.