Hey. I am new here and have a deal in front of me that I need your guy’s opinion to make a decision.
Without going into much detail here is what I got:
Triplex with current rent of $3000 in total (great condition, great neighborhood, higher quality rental)
Current value around $450-475k
I have the opportunity to buy it by investing 220k within the next 6 years (would not take a loan for it) and after 10 years the place would be mine - paid off.
For the 10years my partner (who would buy it in cash) would pay all expense and collect all the rent so there is nothing in it for me until 10years are up which is when I would take over.
Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
7y
So you would invest $220k with a 0% return for ten years, and your partner would invest $400k + for a likely negative return? This doesn't pass the smell test as it doesn't appear to be a good deal for either of you.
@Clifford Paul I didn't mention but my "partner" are actually my grandparents who live in one of the units and just want peace of mind knowing that they will never be kicked out of there and also would love to help us getting into real estate this way. The purchase would actually be made in mine and my wife's name so it's completely safe for us.
So you would invest $220k with a 0% return for ten years, and your partner would invest $400k + for a likely negative return? This doesn't pass the smell test as it doesn't appear to be a good deal for either of you.
I wouldn't have avreturn for 10 years but afterwards I'd walk away with a paid-off house that has great cashflow - and is possibly worth lots more that today. My "partner" are actually my grandparents who live in one of the units paying rent right know. I calculated it out and after 10 years they will come out far ahead doing this than paying rent for that long (even after considering expenses, vacancies, taxes, insurance etc.)
Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
7y
@Andrew Unruh $220k at 0% for ten years is really tough to get over, and buying so far below market from a relative may give you gift taxes etc. Let's say you invest in something else what would your return be over that period of time. This wouldn't be an investment but charity for your grandparents if you are okay with that then by all means go ahead but getting use of 75% of a property after having 0% return for 10 years is not a good investment.