Advice

[Jasmin Dover]

A friend purchased a single family home that he currently owns clear and free that needs some works. If I qualify for a conventional loan, will I be able to use the loan to do the repairs with the property being held by a trust? We are looking to do a 60/40 split on profit.

[Greg Scott]

Jasmin:

I'd ask you to back up a level to make sure you aren't getting in over your head.

The Property- Have you run the numbers to know what you need to spend on rehab vs. what the house will be worth afterward?  Are you comfortable with the rehab quotes?  Are you comfortable with the anticipated after-repair value?

The Deal - Have you drawn up a written agreement with your friend so that both of you are clear what a 60/40 split means?  What happens if the rehab costs go up?  What happens if it doesn't sell as high?   How do you handle utility, tax, and maintenance costs if it takes a while to sell?

The People - How good a friend is this?   You are effectively plowing your money into someone else's property.  Have you considered making this a formal contract?

Just some things to think about.