All Forum Posts by: Brian Kraft

Thanks for the input thus far, folks. I don't ask about martial status--she just told me. My standard procedure is to get a clear financial picture and my concern is that going through a divorce can have negative financial implications. 

Hello! I have a few fairly solid applicants for one of my units, but one I'm slightly leaning towards. However, she said she's going through a divorce (it would just be her renting) and I started to wonder if that could complicate her financial future, if it's not already complicated. I've actually gotten divorced (then re-married!) myself, but we were quite easily able to split things between the two of us, with no issues at all. Therefore, I don't have an understanding of how the money aspect of it goes, when there's a battle (which she did mention vaguely in passing)--specifically in Colorado. 

Should it be of any concern to me? Or does it really depend on the intricacies of their situation? She was very open and friendly and I would guess--open to filling me in on some details, if I were to ask-- but I'm not even sure if that's appropriate to ask. I mean-- I thought it was, but when I mentioned it to my wife, she thought it might not be appropriate. Guide me, BP, guide me. 

The latest bill came in under $30. All is well. Thanks!

Thank you all! I continued to question the broker as to why Fannie/Freddie would even play a role in the loan. Finally, after he dug a little deeper and spoke with the underwriter--he came back to be apologizing for his error. He was thinking it was the same scenario as if the funds were being secured against the subject property... which would then kick the 5 year min amortization schedule in (along with no balloon payments before 5 years). Instead, we are planning on securing it against another property of mine--which means we can create any f%@$ing terms we want. Thank you again!

So, we'll just draft something up and work with the title company to get everything in line. I've never drafted something like this up-- can anyone point me to a good resource as an example with some common terms/conditions? 

Yes, I understand the potential challenges of such an agreement with family. Thank you for mentioning it though.

Per the broker-- they are fine with 70/30. Since the 30% is secured against another property, it is not considered "borrowed" funds for this transaction. 

Per the broker--a Fannie/Freddie requirement is min 5 yr amortization schedule. 

@Upen-- the credit union keeps loans in-house.

So, if my sister and I create a side-document with our own shorter terms, late fees, etc and sign (and notarized)... I would imagine the stricter terms legally supersede the looser ones, yes? Not asking for legal advice, of course. :-)   

 Only when backed by Fannie/Freddie, correct? Hence the Credit Union-- no such restrictions.

 My understanding is, unless it's an all-cash purchase, it must be secured funds. I think otherwise, it'd be considered a gift. My understanding is somewhat limited, however.

I'm under contract on an investment property-- a duplex in Colorado and I'm trying to navigate the details of a partial private loan from my sister. I'm working with a mortgage broker I like that I've used in the past. He's suggested an approach which sounds good to me, but my sister, who is infamously indecisive, is starting to offer up alternate ideas--which she has yet to thoroughly understand, let alone communicate clearly to me about. So, I'm just asking here if you may have thoughts on the subject.

The proposed plan by the mortgage broker is 70% conventional loan and 30% down ("properties 5-10 for me and duplex" was explained to me for the reason for 30 vs 25% min down). The idea being that the 30% would be coming from my sister as secured funds--with a recorded note and deed, against one of my other properties. Because it's secured funds, the minimum term is 5 years. The plan I've been discussing with my sister is a cashout refi in 6 to 12 months post-closing (those details are still being figured out, based on a Credit Union's requirements). Even in the event I can't make her 100% whole with the cashout refi, I plan on taking out a HELOC for some improvements, which I plan to do with the equity in my primary, and there would be sufficient $ there to fill in any outstanding debt with my sister.

Her concern was the ambiguity of the 5 year term vs my intention of paying her back within a year, at most. She is looking for a more formal agreement that spells out *exactly* what she and I are agreeing to. She said she had taken a very quick look online and saw some other approach(es) that would including all the formalities, but could be structured for the quicker repayment. It certainly can't be in the form of a gift, but what other solutions are there we could utilize to structure things to get around the 5 year minimum? 

 Hey Shay! Cool-- it is you! Things are good. I've been investing for 16 years. I focus on buy and holds, but since discovering the amazing place that is Bigger Pockets, I've been learning soooo much more. So glad to have you around. You should definitely come to the monthly meetups-- things to learn, people to connect with, and always a fun time with good people. 

@Shay Kent! I think we worked together on an MSN/Buick video gig-- I was the still photographer. If not-- oops sorry! I think it was you though! I hope all is well. Just wanted to say 'hi' and 'welcome!'