Funds from Parents for buying investment Properties

Funds from Parents for buying investment Properties

Rental Property Investor · Memphis, TN · Member since 2013 · 48 posts · 18 votes

I am in the beginning stages of looking into how to work a deal with my father on my first investment property and the best way to structure a deal with him where he would provide a chunk of change for the deal.

I recently read a lot of posts in the forum "Cash Gift From Parents can't be used for investment purchase?" that was started by @Brandon Hall. 

One suggestion that was not brought up but that I have a question for is- Would opening a joint bank account with my father help with the technicalities of the "gifting of funds" or would it not matter? I have an old bank account that I believe my father still has access to (was originally granted access to the account along with me to have control in case funds were short when I was a kid and I never took him off). I actually still use that account and have all my money from work direct deposited into that account. His name is not actually on the account though. If they just transferred money from a bank account at the same bank would the "gifting" requirement/rules still apply?

Thanks,

Ryan

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  • Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
    10y

    @Ryan Schuler, you (and your Father) really need a trusted Tax Advisor regarding those implications. But hey, that's just my advice. All the best...

  • Lender · Las Vegas, NV · Member since 2015 · 2k+ posts · 1k+ votes
    10y

    You have to declare the source of your down payment in your loan application. (s)  The application asks if any of the money is borrowed or is a gift.  Unless you intend to make a false statement on your loan application (s) and commit a felony (ies) by doing so, your idea won't work.  If your Father is intent on funding your real estate investments, then get to a real estate attorney and draw up an agreement between you and your father for him to do so.  Make sure and include in that agreement some manner of financial benefit back to your father for his willing participation in providing funds for your endeavors, including the return of his money and a reasonable return on his investment while you have it.

  • Rental Property Investor · Memphis, TN · Member since 2013 · 48 posts · 18 votes
    10y

    Thanks @Charlie Fitzgerald for the advice. No I'm not trying to do anything illegal, just trying to figure out what is and isn't illegal. I don't mind forming a partnership with my father if that is needed, just curious if there were other ways to get funds from him.

    Thanks.

  • Lender · Las Vegas, NV · Member since 2015 · 2k+ posts · 1k+ votes
    10y

    My pleasure.  Good luck!

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