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Offline franksolich

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primitives discuss family real-estate
« on: May 17, 2012, 08:24:53 PM »
http://www.democraticunderground.com/1121121

Oh my.

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Lindakimy (15 posts) Profile Journal Send DU Mail Ignore

Real estate and family

I have a question and would like to get some input before making a decision. My older brother and his wife are retired, both accountants for the state where they lived, with pensions and social security. They bought a new house a few years ago and are now underwater. I am the "poor" one in the family but I do own my (far less desirable) house free and clear and have a very good credit rating because I have been careful to live well within my means for many years.

My brother is at the point, given that his house can't be refinanced at a reasonable rate and has many, many serious problems - it's basically a lemon - that he is ready to walk away. However he lives in a state where that is more difficult. He doesn't want to jump into an even worse situation but he is edging over into desperation.

Lately my husband and I have talked about buying a property to rent out as an investment. Places are very inexpensive where we live with prices down and we could make more than we do with bank CDs and such. I shrank back from that (careful as I am) because it's fine if you have a renter but you have to come up with the payment if you don't. That scares me.

Last weekend when my brother was visiting we talked about this and he said he would be delighted to pay a high rent if he just didn't have to worry any more about the place he has now and how it is tipping. We chatted a bit and looked up a few properties and they are considerably less expensive here that where he lives. I think he is seriously interested. We would love to have him and his wife nearby because we all get along very well and enjoy time together.

My question is whether this is a good thing. If my husband and I bought a place and rented it to my brother (whom I trust completely) for enough to pay us back for the down payment with interest within a few years and then dropped his rent to the amount due to the bank plus taxes and insurance but kept the property in our name with the provision that we would will it to him in case of our death...would that be a sound investment?

It seems to me that it would help us (higher interest rate) and him (lower monthly cost and no more worry about the failing house he bought). Am I telling myself a story here?

Any thoughts? I am certainly not an expert on either finance or real estate. I would just like to get a bit more from my savings and also help my brother through a hard time.

The attorney primitive:

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elleng (30,749 posts) Profile Journal Send DU Mail Ignore

1. Sounds interesting, but I have no real advice except cross-post in 'Economy?'
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apres moi, le deluge

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Offline USA4ME

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Re: primitives discuss family real-estate
« Reply #1 on: May 17, 2012, 08:38:29 PM »
Quote from:
Lindakimy

My question is whether this is a good thing. If my husband and I bought a place and rented it to my brother (whom I trust completely)

Mistake #1

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for enough to pay us back for the down payment with interest within a few years and then dropped his rent to the amount due to the bank plus taxes and insurance but kept the property in our name with the provision that we would will it to him in case of our death...would that be a sound investment?

So basically he's making the house payment with taxes and insurance but you'll own the house.  OK, so what happens when the house needs repairs, etc...  You got the pockets to cover these expenses?

.
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Offline GOBUCKS

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Re: primitives discuss family real-estate
« Reply #2 on: May 17, 2012, 08:57:37 PM »
So, DUmmy, you're going to invest your life savings in a property, and then depend on rental income from a deadbeat who's walking out on a previous financial obligation?

Sounds okay to me.
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Offline obumazombie

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Re: primitives discuss family real-estate
« Reply #3 on: May 17, 2012, 09:00:00 PM »
They should read the book "RealEstate for DUmmies".
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Offline Skul

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Re: primitives discuss family real-estate
« Reply #4 on: May 17, 2012, 09:06:52 PM »
Why is anything related to private real estate transactions between family members, taxed at all.
Taxes have already been paid.
Why in the bloody damn hell do I, or my kids have to pay more taxes for something I already own?
I've seen the "death tax" in action, and it damn near cost a friend his parents property.
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Offline obumazombie

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Re: primitives discuss family real-estate
« Reply #5 on: May 17, 2012, 09:08:44 PM »
Quote from: Skul on May 17, 2012, 09:06:52 PM
Why is anything related to private real estate transactions between family members, taxed at all.
Taxes have already been paid.
Why in the bloody damn hell do I, or my kids have to pay more taxes for something I already own?
I've seen the "death tax" in action, and it damn near cost a friend his parents property.
Because, there's no such thing as double taxation, according to libs.
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Offline USA4ME

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Re: primitives discuss family real-estate
« Reply #6 on: May 17, 2012, 09:13:26 PM »
Quote from: obumazombie on May 17, 2012, 09:00:00 PM
They should read the book "RealEstate for DUmmies".

I like the chapter "How I Turned A Million In Real Estate Into $25 In Cash."

.
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Offline franksolich

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Re: primitives discuss family real-estate
« Reply #7 on: May 17, 2012, 09:14:16 PM »
Quote from: USA4ME on May 17, 2012, 09:13:26 PM
I like the chapter "How I Turned A Million In Real Estate Into $25 In Cash."

Good one.

Awesome.
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apres moi, le deluge

Milo Yiannopoulos "It has been obvious since 2016 that Trump carries an anointing of some kind. My American friends, are you so blind to reason, and deaf to Heaven? Can he do all this, and cannot get a crown? This man is your King. Coronate him, and watch every devil shriek, and every demon howl."

Offline obumazombie

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Re: primitives discuss family real-estate
« Reply #8 on: May 17, 2012, 09:14:49 PM »
Quote from: franksolich on May 17, 2012, 09:14:16 PM
Good one.

Awesome.
I get half credit !
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Offline Skul

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Re: primitives discuss family real-estate
« Reply #9 on: May 17, 2012, 09:24:04 PM »
Quote from: obumazombie on May 17, 2012, 09:14:49 PM
I get half credit !
I'll drink the first half of that cold beer, you can have the other part. :-)
I'm doing the rightous thing and sharing. :whistling:
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Then-Chief Justice John Marshall observed, “Between a balanced republic and a democracy, the difference is like that between order and chaos.”

John Adams warned in a letter, “Remember democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet, that did not commit suicide.”

Offline obumazombie

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Re: primitives discuss family real-estate
« Reply #10 on: May 17, 2012, 09:27:36 PM »
Quote from: Skul on May 17, 2012, 09:24:04 PM
I'll drink the first half of that cold beer, you can have the other part. :-)
I'm doing the rightous thing and sharing. :whistling:
As long as it's at the next available OWS rally. I'm in the mood for some LOOTING !
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Offline Skul

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Re: primitives discuss family real-estate
« Reply #11 on: May 17, 2012, 09:37:03 PM »
Quote from: obumazombie on May 17, 2012, 09:27:36 PM
As long as it's at the next available OWS rally. I'm in the mood for some LOOTING !
You da man!  :cheersmate:
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Offline Gina

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Re: primitives discuss family real-estate
« Reply #12 on: May 18, 2012, 08:20:04 AM »
Quote from: GOBUCKS on May 17, 2012, 08:57:37 PM
So, DUmmy, you're going to invest your life savings in a property, and then depend on rental income from a deadbeat who's walking out on a previous financial obligation?

Sounds okay to me.

never trust family unless you are willing to walk away from deal with no hard feelings
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Offline Zeus

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Re: primitives discuss family real-estate
« Reply #13 on: May 18, 2012, 09:40:14 AM »
Sounds like a contract for deed situation. If structured right the dummy could use the rental property as a offset to regular income thereby lowering his tax obligation.
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Offline DumbAss Tanker

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Re: primitives discuss family real-estate
« Reply #14 on: May 18, 2012, 10:04:29 AM »
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If my husband and I bought a place and rented it to my brother (whom I trust completely) for enough to pay us back for the down payment with interest within a few years and then dropped his rent to the amount due to the bank plus taxes and insurance but kept the property in our name with the provision that we would will it to him in case of our death...would that be a sound investment?


How is that an investment at all?!?  Counting the time value of money and maintenance, you're not even breaking even on it, and your bro is getting a house out of the deal.

No wonder Democrats can't understand why Obama's fiscal policy is insane.
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Offline Karin

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Re: primitives discuss family real-estate
« Reply #15 on: May 18, 2012, 10:25:25 AM »
Quote from: Zeus on May 18, 2012, 09:40:14 AM
Sounds like a contract for deed situation. If structured right the dummy could use the rental property as a offset to regular income thereby lowering his tax obligation.

Sounds like a situation where you shouldn't be looking to the DUmp for solid advice.  Same with "what should I do about the voices in my head?" 
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Offline Evil_Conservative

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Re: primitives discuss family real-estate
« Reply #16 on: May 18, 2012, 05:43:02 PM »
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They bought a new house a few years ago and are now underwater.

Quote
given that his house can't be refinanced at a reasonable rate and has many, many serious problems - it's basically a lemon - that he is ready to walk away

Did they not care for their house?  I mean, really.  That's just sad.
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Offline zeitgeist

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Re: primitives discuss family real-estate
« Reply #17 on: May 18, 2012, 06:06:02 PM »
Quote from: obumazombie on May 17, 2012, 09:27:36 PM
As long as it's at the next available OWS rally. I'm in the mood for some LOOTING !

I could use a good small 20-24" lcd tv  ~  but no off brands. :whistling:

ETA:
In the book of Real Estate for Dummies how many chapters do they devote to things which can and will go wrong renting to friends and relatives.  I can definitely add a few pages.  Friends don't let friends rent to friends or relatives.  Never, ever, ever.   I think that is a corollary to never loan money to a friend, relative, or strange that you want to ever see again.
« Last Edit: May 18, 2012, 06:18:41 PM by zeitgeist »
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