How to handle family and friend investors who are helping me out thru tough situation

[Domenico Barbuto]

This is my first time posting so forgive me if I am not in the right spot as I was not sure exactly where to put this.  I am going thru a divorce and I will be keeping my house, estimate worth 850k, owe 285k.  We also have a condo, which we owe nothing and put the range at 350k as that was the only offer we got as we were trying to sell.  There is pending litigation, which is related to the parking lot and will make it difficult to sell at this time.  I would like to buy out my wife and with our assets, it would most likely be anywhere between 250-300k in which I would have to give her.  Ideally, I would like it to be 250k, where I would take out a loan of 150k on my home of residence for a total loan of 435k (which I need to do to get wife off loan anyway) and take on a friend and brother for 50k each for the other 100k.  They would not have anything to do with the condo as they would be silent partners and each would own 15% of it.  How would I structure this so it is fair to them, whether it be lump sum when I sell or if I could buy their equity over the years as I come across more money?  Do I pay them equity yearly?  Not sure how to go about this and would appreciate any help or ideas.

[Jeff Sine]

Domenico, you’re in a situation that comes up a lot in divorce scenarios. The good news is, you likely don’t need to overcomplicate things with equity shares to friends/family.

Lenders (including ours) often offer a specific ‘Equity Buyout Refinance’ for divorce cases, where the buyout amount to your spouse is treated as a rate & term refinance instead of a cash-out. That usually gives you better terms. For example, you could roll your $285k balance plus the $150k you need into a single new mortgage around $435k.

That way you settle with your wife cleanly, get her off the loan, and avoid giving away equity in the condo. If you still wanted to bring in your brother/friend for short-term funds, the cleanest structure would be a private note (loan) rather than equity ownership, so it doesn’t complicate title or resale later.

Happy to walk through numbers and options if you’d like to see what this would look like