All Forum Posts by: Rachel Leonard

Not sure this is the right sub-group to post this question in, please redirect me if not.

I am considering purchasing my neighbor's house.  I know her well and I know the house well.  It would be a straightforward transaction, I wouldn't be asking for any concessions or doing any major negotiating.  I purchased my primary residence and a vacation home in the last five years, working with a great buyers agent.  I am considering doing this deal with no agents on either side to save money (savings the seller would pass on to me) - my buyers agent actually suggested that when I explained the situation to her and that I really only needed basic transactional help.  I have a lender, I would work with the same law office as previously, I have an insurance agent, I would find a home inspector, I would coordinate with the lender on the assessment - I feel quite capable of managing all of that.  What else am I not thinking of, or what watch outs would you give me?

 He does have a couple half siblings, but they are in another country and not in frequent contact with his parents, so from their perspective all they would see is that the parents are living in an investment property that we own, and they are paying rent.  

There's enough money between us and them (the parents) to cover the various issues that might happen, my main concern is that the bulk of the cash is with the parents, and I'm not sure how to position it to a bank to get a mortgage in my name - because of my understanding that this would be considered an investment property and you can't use gifts as down payments for investment properties.  We could put in an offer and put a down payment on a house today, but I'm not confident I would get approved for a loan with a down payment from funds that just arrived in my account a few days ago from my in-laws.  

 I would not be looking to make a profit off of them monthly as I might with a traditional renter, just covering the costs of the house.  That said, they wouldn't be looking for the down payment to be paid back.  Frankly, the expectation is that this will be their last move.  Essentially it works out to them gifting us a house - they'll pay the down payment and reimburse us for mortgage costs each month, and when they die the house will be ours (and we will continue making the payments ourselves or sell it).

I'm not sure yet how repairs will be funded, but either we or them could cover those costs financially and neither of us are going to be trying to squeeze the other one, so I'm not worried about managing that.  I'm only concerned with the financial logistics to get the mortgage in my name rather than theirs.

My in-laws are moving to the US from another country.  They would rather not go through the paperwork hassle of purchasing another house here themselves; they would prefer that my husband and I purchase a house in our name and they will rent it from us.  They are providing the money for the down payment and have in fact already transferred $100K to an account in my husband's name.  We already own a primary residence and vacation home, so this will be seen as an investment property.  How should I think about getting financing?  My understanding is that a gift cannot be used as a down payment for an investment property, so my thought is to wait 2-3 months before applying for a loan, to season the funds.  I do have sufficient cash of our own in our bank accounts to show we could cover the mortgage for ~6 months if it was unrented.  Any other thoughts/ideas?