Borrowing money from relatives

[Evan Hauler]

Hello everyone!

I am looking to buy my second property, I purchased the first using a bank loan. Now my parents are wanting to buy the next one in cash, due to high interest rates. How best do I go about doing this? Are both my wife, mom and i all on the deed or should it just be my mom and I. 

Another caveat is that the money is going to be a gift my grandpa, who wants to see the families money being put to use, but does not have the will or health to be involved. So we are planning on making the money a gift to my mom and then a loan to me. 

Essentially, I am in need of a walk through. Thank you all in advance for your responses I truly appreciate it. 

[Evan Hauler]

Quote from @Ryan Muska:

First off, make sure that this property is going to be worth it. The worst thing to happen would be to get this loan from your family and the property ends up being a bust.

That being said, make sure you have it all written down, checked by an attorney, and then notarized. You can make all these verbal agreements, but money is a powerful thing that tears relationships apart. So, having it written down is a safe bet. 

There only needs to be one name on the deed, yours. Unless the other individuals want to be on the deed, there is no reason to have multiple names on it. Even if they want to put a lien against the property (which your mom technically will be doing) she does NOT have to have her name on the deed. It actually might muck things up if her name IS on the deed (that is a question for a RE attorney). 

As far as getting money from your grandpa and who it passes through, I can't imagine it being much of an issue if you are "planning on making the money a gift to [your] mom and then a loan to [you]." 

My biggest recommendation is getting a lawyer to assist you on this. It may be expensive but it is definitely going to be worth it. 

 Thank you, the plan is for me to house hack, for an extended time in this next property, so I will make sure in works with me living in it. But it doesn't necessarily need to work after. I will contact an attorney thanks again