Dealing with family members as Investors

[Cole Soreano]

My wife and I recently bought our first rental. Currently the property is a single family house which sits on a double lot and is zoned for multi family use. Our goal is to build a multi family unit in the next year, the only challenge is funding it. My father in law mentioned he would fund the down payment for the new construction loan, but hinted getting a cut of the cash flow every month. It would be great to get the project going but I am hesitant mixing family with business.

Has anyone had a similar experience with this?

[Theresa Harris]

If you want to borrow money from your family, figure out the arrangements ahead of time and get it all in writing.  It sounds like he'd be willing to buy a share of the place in return for part of the rent which is fair and one way to do it.  If you'd rather just borrow the money and pay him back with interest, then that is another option.