Home equity gifting to fuel investments

1 Reply

I'm sitting here pondering creative ideas to help fuel my early start in real estate investing. I'm curious about home equity. My father owns a home out-right valued around $200,000. It has recently came to my attention that he plans on willing the home 50-50 to my sister and I in the future. Is it possible for him to "gift" a portion of his equity on the home to help fuel an investment property for myself? He has no plans on selling his home and plans on living there the remainder of his life. Please shed some light on this situation. Any advice is well appreciated. Dane Kania

@Dane Kania

Seems to me this comes down to trust/risk tolerance levels.

Main hurdle I see is protecting the downside - for instance let's say he gives you funds tied to your half equity in advance - what happens if you struggle to make payments on the line of credit that are now needed - now there's a lien on the property.  If your dad has the funds to cover that and then essentially reduce what he's giving you with regards to the house - then... I suppose it'd be possible.  However, what happens to the other half of the house, in that scenario?

I'm not suggesting this is likely - however...  it's smart to think of the downside risk as well as the upside.

From my experience intermingling of family finances in this way is not a good idea.

There's got to be other ways for you to get started?