I am completely new to REI and have two investors willing to partner with me on a rehab opportunity. Let me give you the scenario:
- WE WOULD BE APPLYING FOR A FANNIE MAE HOMESTYLE LOAN,
- THE 2 PARNTERS WOULD BE COMPLETELY RESPONSIBLE FOR PAYING FOR THE DOWNPAYMENT
- THEY WILL BE PAYING THE INTEREST ON THE LOAN EVERY MONTH UNTIL THE PROPERTY IS SOLD
- EVERYTHING WILL BE PLACED IN MY NAME (LOAN, HOME, ETC),
They have offered me 10% of the profits, with them taking 45% each on this deal since they are placing the original downpayment. Is this something that makes sense? I understand that without the down payment the deal cannot be done but since everything is in my name, am I not at risk as well? Just wondering if the split of the profits make sense.
Any guidance you could provide would be greatly appreciated. As I stated, I am just trying to get my foot in the door and want to make sure I am not setting myself up for failure.
Let me know your thoughts.
Aside from them using you as a front on the mmortgage what are you contributing to the deal.
I would receive the downpayment and would have it in my bank account. I know it has to sit for 3 months, but am a little confused about why they wouldnt allow me to use the funding if it was given to me by friends or family. It would be income that would be reported on and that I would ultimately have to pay taxes to.
Again, I am sorry I am such a novice and realize this is probably an extremely stupid question.
Join the Largest Real Estate Investing Community
Basic membership is free, forever.