Multiple-family mortgages

[beanmaestro]

Wondering whether someone can help with this…

My wife and I are considering our options for buying in a couple years when prices are near bottom. One of the options would be buying a duplex or a multi-unit house and splitting it with friends. It might just be two couples in a duplex, or it might turn into a mini cohousing operation in an apartment building.

I’m imagining that the two financing options would be for one family to buy the whole property, and rent it to the others; or for the group to qualify as joint owners. Is one of these options substantially easier to qualify? What LTV would likely be available in each option?

Thanks for any advice…

[patb]

co owner is ahassle to operate but easier to qualify if there are more
people who have assets to back the play,

[surveyor]

don’t

I don’t recommend it – too many hassles (and this is coming from someone who can handle hassles). You will need to basically write up a partnership agreement to make sure that everyone does their fair share, when you can buy each other out, etc. What if the other person loses their job, and then can’t make up their mortgage payment, you will have to pick up the slack, etc. Too many what if’s when you are by yourself and it gets worse when you involve other people, particularly friends and family (a good way to ruin relationships is to involve friends and family in money).

As for qualifying for it, it’s not too difficult if the property is less than 5 units. That will make it residential and the LTV ratios, income requirements, and other documentation are not that severe.

Honestly, I would recommend just trying to qualify for the property on your own and see where that gets you. Do the math, see what you can afford, etc.

Oh, and by the way, if you are thinking of buying anywhere in California, I doubt there are any four plexes or less that will work as good income properties right now (I’ve been seeing four plexes for around $650k and more. It needs to get around $500k before it starts working).

[beanmaestro]

I’d certainly prefer to buy the place outright, and rent the units directly to our friends, but I’m curious how both options work. Let me know if the “common sense” is correct:

Single Owner: My wife and I would probably need to have X% down, plus 6+ months savings, and income about Y times greater than (annual PMI – Z% of annual rent for units we won’t live in). What are X, Y, and Z likely to be?

Partnership: Together, we have to put A% down with 6+ months savings, and prove income B times greater than PMI. What are A and B? And obviously, we have to be crazy enough to set up such a partnership.

[EconProf]

BobS
RUN, don’t walk, away from all partnership proposals. The odds against them working in the long run are overwhelming.

[beanmaestro]

We’d be likely to go single-owner anyway because my wife and I have the lion’s share of the down payment. We wouldn’t even consider the partnership option except the people involved would probably be me, my wife, my best friend, her best friend, and maybe our double-dating couple.

So, does anyone have any thoughts on the X,Y,Z,A,B above?

[Coronita]

Money  is a great source for  failed friendships.

Did you say you would be doing this with your best friend and your best friend's friend and two couples that aren't even married?

XYZAB…too many variables  (no pun intended), especially you don't even know first hand one of them and the other two aren't even married,.

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[kewp]

Odds are its a bad idea.

But if you must, consider incorporating first. Buy the property via the business then.

[temeculaguy]

Another RUN, don’t walk vote. The odds are about 50/50 that you and your wife will still be together in eight years, the odds that three or four young couples are all together and all still friends is staggering. Something always happens, a partner couple gets divorced or has a financial hardship and wants to sell or be bought out when you aren’t ready or can’t. I have seen many of these involving rentals or vacation homes, still have never met anyone where it worked out and have never heard anyone say “I’d love to do that again.”

[beanmaestro]

It sounds like I should move the financing questions to another thread where I forget to mention the circumstances… I think this thread is doomed to discuss the pitfalls of partnership purchases 🙂

[SD Realtor]

Beanmaestro I would be in the same camp as the others about multiple party ownership. That said, a more direct answer to your question is how to structure your ownership. You and others can own the property as joint tenants or tenants in common… etc… If you are going into a situation like you describe it would be best to structure the ownership in a manner that would be…. easier to deal with should things go wrong. That said, my advice would be to talk to a real estate attorney to find out about different ownership options. Once you see what different ownership options you have then you can talk to someone about financing based on the type of ownership.

SD Realtor

[Aecetia]

Sounds like a sure way to become ex best friends to me.

[Aecetia]

Sounds like a sure way to become ex best friends to me.

[Aecetia]

Sounds like a sure way to become ex best friends to me.

[Aecetia]

Sounds like a sure way to become ex best friends to me.

[Aecetia]

Sounds like a sure way to become ex best friends to me.

[SD Realtor]

Beanmaestro I would be in the same camp as the others about multiple party ownership. That said, a more direct answer to your question is how to structure your ownership. You and others can own the property as joint tenants or tenants in common… etc… If you are going into a situation like you describe it would be best to structure the ownership in a manner that would be…. easier to deal with should things go wrong. That said, my advice would be to talk to a real estate attorney to find out about different ownership options. Once you see what different ownership options you have then you can talk to someone about financing based on the type of ownership.

SD Realtor

[SD Realtor]

Beanmaestro I would be in the same camp as the others about multiple party ownership. That said, a more direct answer to your question is how to structure your ownership. You and others can own the property as joint tenants or tenants in common… etc… If you are going into a situation like you describe it would be best to structure the ownership in a manner that would be…. easier to deal with should things go wrong. That said, my advice would be to talk to a real estate attorney to find out about different ownership options. Once you see what different ownership options you have then you can talk to someone about financing based on the type of ownership.

SD Realtor

[SD Realtor]

Beanmaestro I would be in the same camp as the others about multiple party ownership. That said, a more direct answer to your question is how to structure your ownership. You and others can own the property as joint tenants or tenants in common… etc… If you are going into a situation like you describe it would be best to structure the ownership in a manner that would be…. easier to deal with should things go wrong. That said, my advice would be to talk to a real estate attorney to find out about different ownership options. Once you see what different ownership options you have then you can talk to someone about financing based on the type of ownership.

SD Realtor

[SD Realtor]

Beanmaestro I would be in the same camp as the others about multiple party ownership. That said, a more direct answer to your question is how to structure your ownership. You and others can own the property as joint tenants or tenants in common… etc… If you are going into a situation like you describe it would be best to structure the ownership in a manner that would be…. easier to deal with should things go wrong. That said, my advice would be to talk to a real estate attorney to find out about different ownership options. Once you see what different ownership options you have then you can talk to someone about financing based on the type of ownership.

SD Realtor

[beanmaestro]

It sounds like I should move the financing questions to another thread where I forget to mention the circumstances… I think this thread is doomed to discuss the pitfalls of partnership purchases 🙂

[beanmaestro]

It sounds like I should move the financing questions to another thread where I forget to mention the circumstances… I think this thread is doomed to discuss the pitfalls of partnership purchases 🙂

[beanmaestro]

It sounds like I should move the financing questions to another thread where I forget to mention the circumstances… I think this thread is doomed to discuss the pitfalls of partnership purchases 🙂

[beanmaestro]

It sounds like I should move the financing questions to another thread where I forget to mention the circumstances… I think this thread is doomed to discuss the pitfalls of partnership purchases 🙂

[temeculaguy]

Another RUN, don’t walk vote. The odds are about 50/50 that you and your wife will still be together in eight years, the odds that three or four young couples are all together and all still friends is staggering. Something always happens, a partner couple gets divorced or has a financial hardship and wants to sell or be bought out when you aren’t ready or can’t. I have seen many of these involving rentals or vacation homes, still have never met anyone where it worked out and have never heard anyone say “I’d love to do that again.”

[temeculaguy]

Another RUN, don’t walk vote. The odds are about 50/50 that you and your wife will still be together in eight years, the odds that three or four young couples are all together and all still friends is staggering. Something always happens, a partner couple gets divorced or has a financial hardship and wants to sell or be bought out when you aren’t ready or can’t. I have seen many of these involving rentals or vacation homes, still have never met anyone where it worked out and have never heard anyone say “I’d love to do that again.”

[temeculaguy]

Another RUN, don’t walk vote. The odds are about 50/50 that you and your wife will still be together in eight years, the odds that three or four young couples are all together and all still friends is staggering. Something always happens, a partner couple gets divorced or has a financial hardship and wants to sell or be bought out when you aren’t ready or can’t. I have seen many of these involving rentals or vacation homes, still have never met anyone where it worked out and have never heard anyone say “I’d love to do that again.”

[temeculaguy]

Another RUN, don’t walk vote. The odds are about 50/50 that you and your wife will still be together in eight years, the odds that three or four young couples are all together and all still friends is staggering. Something always happens, a partner couple gets divorced or has a financial hardship and wants to sell or be bought out when you aren’t ready or can’t. I have seen many of these involving rentals or vacation homes, still have never met anyone where it worked out and have never heard anyone say “I’d love to do that again.”

[kewp]

Odds are its a bad idea.

But if you must, consider incorporating first. Buy the property via the business then.

[kewp]

Odds are its a bad idea.

But if you must, consider incorporating first. Buy the property via the business then.

[kewp]

Odds are its a bad idea.

But if you must, consider incorporating first. Buy the property via the business then.

[kewp]

Odds are its a bad idea.

But if you must, consider incorporating first. Buy the property via the business then.

[Coronita]

Money  is a great source for  failed friendships.

Did you say you would be doing this with your best friend and your best friend's friend and two couples that aren't even married?

XYZAB…too many variables  (no pun intended), especially you don't even know first hand one of them and the other two aren't even married,.

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[Coronita]

Money  is a great source for  failed friendships.

Did you say you would be doing this with your best friend and your best friend's friend and two couples that aren't even married?

XYZAB…too many variables  (no pun intended), especially you don't even know first hand one of them and the other two aren't even married,.

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[Coronita]

Money  is a great source for  failed friendships.

Did you say you would be doing this with your best friend and your best friend's friend and two couples that aren't even married?

XYZAB…too many variables  (no pun intended), especially you don't even know first hand one of them and the other two aren't even married,.

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[Coronita]

Money  is a great source for  failed friendships.

Did you say you would be doing this with your best friend and your best friend's friend and two couples that aren't even married?

XYZAB…too many variables  (no pun intended), especially you don't even know first hand one of them and the other two aren't even married,.

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[beanmaestro]

We’d be likely to go single-owner anyway because my wife and I have the lion’s share of the down payment. We wouldn’t even consider the partnership option except the people involved would probably be me, my wife, my best friend, her best friend, and maybe our double-dating couple.

So, does anyone have any thoughts on the X,Y,Z,A,B above?

[beanmaestro]

We’d be likely to go single-owner anyway because my wife and I have the lion’s share of the down payment. We wouldn’t even consider the partnership option except the people involved would probably be me, my wife, my best friend, her best friend, and maybe our double-dating couple.

So, does anyone have any thoughts on the X,Y,Z,A,B above?

[beanmaestro]

We’d be likely to go single-owner anyway because my wife and I have the lion’s share of the down payment. We wouldn’t even consider the partnership option except the people involved would probably be me, my wife, my best friend, her best friend, and maybe our double-dating couple.

So, does anyone have any thoughts on the X,Y,Z,A,B above?

[beanmaestro]

We’d be likely to go single-owner anyway because my wife and I have the lion’s share of the down payment. We wouldn’t even consider the partnership option except the people involved would probably be me, my wife, my best friend, her best friend, and maybe our double-dating couple.

So, does anyone have any thoughts on the X,Y,Z,A,B above?

[EconProf]

BobS
RUN, don’t walk, away from all partnership proposals. The odds against them working in the long run are overwhelming.

[EconProf]

BobS
RUN, don’t walk, away from all partnership proposals. The odds against them working in the long run are overwhelming.

[EconProf]

BobS
RUN, don’t walk, away from all partnership proposals. The odds against them working in the long run are overwhelming.

[EconProf]

BobS
RUN, don’t walk, away from all partnership proposals. The odds against them working in the long run are overwhelming.

[beanmaestro]

I’d certainly prefer to buy the place outright, and rent the units directly to our friends, but I’m curious how both options work. Let me know if the “common sense” is correct:

Single Owner: My wife and I would probably need to have X% down, plus 6+ months savings, and income about Y times greater than (annual PMI – Z% of annual rent for units we won’t live in). What are X, Y, and Z likely to be?

Partnership: Together, we have to put A% down with 6+ months savings, and prove income B times greater than PMI. What are A and B? And obviously, we have to be crazy enough to set up such a partnership.

[beanmaestro]

I’d certainly prefer to buy the place outright, and rent the units directly to our friends, but I’m curious how both options work. Let me know if the “common sense” is correct:

Single Owner: My wife and I would probably need to have X% down, plus 6+ months savings, and income about Y times greater than (annual PMI – Z% of annual rent for units we won’t live in). What are X, Y, and Z likely to be?

Partnership: Together, we have to put A% down with 6+ months savings, and prove income B times greater than PMI. What are A and B? And obviously, we have to be crazy enough to set up such a partnership.

[beanmaestro]

I’d certainly prefer to buy the place outright, and rent the units directly to our friends, but I’m curious how both options work. Let me know if the “common sense” is correct:

Single Owner: My wife and I would probably need to have X% down, plus 6+ months savings, and income about Y times greater than (annual PMI – Z% of annual rent for units we won’t live in). What are X, Y, and Z likely to be?

Partnership: Together, we have to put A% down with 6+ months savings, and prove income B times greater than PMI. What are A and B? And obviously, we have to be crazy enough to set up such a partnership.

[beanmaestro]

I’d certainly prefer to buy the place outright, and rent the units directly to our friends, but I’m curious how both options work. Let me know if the “common sense” is correct:

Single Owner: My wife and I would probably need to have X% down, plus 6+ months savings, and income about Y times greater than (annual PMI – Z% of annual rent for units we won’t live in). What are X, Y, and Z likely to be?

Partnership: Together, we have to put A% down with 6+ months savings, and prove income B times greater than PMI. What are A and B? And obviously, we have to be crazy enough to set up such a partnership.

[surveyor]

don’t

I don’t recommend it – too many hassles (and this is coming from someone who can handle hassles). You will need to basically write up a partnership agreement to make sure that everyone does their fair share, when you can buy each other out, etc. What if the other person loses their job, and then can’t make up their mortgage payment, you will have to pick up the slack, etc. Too many what if’s when you are by yourself and it gets worse when you involve other people, particularly friends and family (a good way to ruin relationships is to involve friends and family in money).

As for qualifying for it, it’s not too difficult if the property is less than 5 units. That will make it residential and the LTV ratios, income requirements, and other documentation are not that severe.

Honestly, I would recommend just trying to qualify for the property on your own and see where that gets you. Do the math, see what you can afford, etc.

Oh, and by the way, if you are thinking of buying anywhere in California, I doubt there are any four plexes or less that will work as good income properties right now (I’ve been seeing four plexes for around $650k and more. It needs to get around $500k before it starts working).

[surveyor]

don’t

I don’t recommend it – too many hassles (and this is coming from someone who can handle hassles). You will need to basically write up a partnership agreement to make sure that everyone does their fair share, when you can buy each other out, etc. What if the other person loses their job, and then can’t make up their mortgage payment, you will have to pick up the slack, etc. Too many what if’s when you are by yourself and it gets worse when you involve other people, particularly friends and family (a good way to ruin relationships is to involve friends and family in money).

As for qualifying for it, it’s not too difficult if the property is less than 5 units. That will make it residential and the LTV ratios, income requirements, and other documentation are not that severe.

Honestly, I would recommend just trying to qualify for the property on your own and see where that gets you. Do the math, see what you can afford, etc.

Oh, and by the way, if you are thinking of buying anywhere in California, I doubt there are any four plexes or less that will work as good income properties right now (I’ve been seeing four plexes for around $650k and more. It needs to get around $500k before it starts working).

[surveyor]

don’t

I don’t recommend it – too many hassles (and this is coming from someone who can handle hassles). You will need to basically write up a partnership agreement to make sure that everyone does their fair share, when you can buy each other out, etc. What if the other person loses their job, and then can’t make up their mortgage payment, you will have to pick up the slack, etc. Too many what if’s when you are by yourself and it gets worse when you involve other people, particularly friends and family (a good way to ruin relationships is to involve friends and family in money).

As for qualifying for it, it’s not too difficult if the property is less than 5 units. That will make it residential and the LTV ratios, income requirements, and other documentation are not that severe.

Honestly, I would recommend just trying to qualify for the property on your own and see where that gets you. Do the math, see what you can afford, etc.

Oh, and by the way, if you are thinking of buying anywhere in California, I doubt there are any four plexes or less that will work as good income properties right now (I’ve been seeing four plexes for around $650k and more. It needs to get around $500k before it starts working).

[surveyor]

don’t

I don’t recommend it – too many hassles (and this is coming from someone who can handle hassles). You will need to basically write up a partnership agreement to make sure that everyone does their fair share, when you can buy each other out, etc. What if the other person loses their job, and then can’t make up their mortgage payment, you will have to pick up the slack, etc. Too many what if’s when you are by yourself and it gets worse when you involve other people, particularly friends and family (a good way to ruin relationships is to involve friends and family in money).

As for qualifying for it, it’s not too difficult if the property is less than 5 units. That will make it residential and the LTV ratios, income requirements, and other documentation are not that severe.

Honestly, I would recommend just trying to qualify for the property on your own and see where that gets you. Do the math, see what you can afford, etc.

Oh, and by the way, if you are thinking of buying anywhere in California, I doubt there are any four plexes or less that will work as good income properties right now (I’ve been seeing four plexes for around $650k and more. It needs to get around $500k before it starts working).

[patb]

co owner is ahassle to operate but easier to qualify if there are more
people who have assets to back the play,

[patb]

co owner is ahassle to operate but easier to qualify if there are more
people who have assets to back the play,

[patb]

co owner is ahassle to operate but easier to qualify if there are more
people who have assets to back the play,

[patb]

co owner is ahassle to operate but easier to qualify if there are more
people who have assets to back the play,

[Author]

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