How many points for triple net?

Question

Hello PB friends,

I have a good friend who is eager to buy and live in a home but cannot do conventional financing due to no credit and no "verifiable" income.  Our plan is for me to purchase the property he choices and I triple net lease it to him with interest for a fee equal to the required down payment and closing costs of the aquisition.  My question is what is the typical range for points?  How much will a bank need me to put down on a investment property (not owner occupied)?  Thank you all for your time.

- Joe

Account Closed · Answer

@Brian Gibbons ,

I understand what you are saying but the link you provided said the ownership has to be equal or half in this case.

"The individuals, who are called joint tenants, share equal ownership of the property and have the equal, undivided right to keep or dispose of the property."

I am definitely missing something and appreciate your patience.

Account Closed · Answer

Can I purchase the property, rent the property (annually, renter covers all maintenance), then sell to my friend once the note has been paid off?

Account Closed · Answer

@Brian Gibbons undefined

Thanks for the link.  I will definitly look into this.

Account Closed · Answer

Don,

Lease options are prohibited is the SAFE act?  I will research more on the SAFE act.  Could we simply agree on a lease with an additional cost ("points").  I am not arguing whether this is a good idea or legal, just want to learn where the line is.

@Don Konipol undefined

Don Konipol · Answer

First off, if you are leasing it to him he does not pay interest, he pays rent.  Secondly, points are paid by a borrower, since he is not a borrower he can not pay points.  What you are proposing is a thinly disquised owner occupied loan assumption, or at the very least a lease option.  This falls under the SAFE Act.  My advise is to walk away.  If you don't and do this deal, you will lose a friend and your down payment after he can't make the payments, you kick him out, he engages an attorney, and you are sued for violations (plural) of consumer financing regulations.

Account Closed undefined

Brian Gibbons · Answer

you can have fractional ownership in title, see an attorney.

Brian Gibbons · Answer

Here is an idea:

You buy it, Joint Tenants In Common,

http://legal-dictionary.thefreedictionary.com/Joint+Tenancy

He pays all costs after you buy it, you have some percentage like 25% to 50%, if he defaults, have some kind of quit claim deed to get all the house back, and define what constitutes a default.