Updated over 11 years ago on . Most recent reply
creatively convert family loan to increase investment
I have a family loan on a single family home; owe 90k, home is worth 110k. I would like to be able to pull a chunk of money as a downpayment to begin investing in multi-family. My basic plan is to sell the home, and ask to have the 90k loaned again as the downpayment on an owner financed multi-family property. I also would like to form an LLC at that time for the multi-family property as the current property is simply in my name. So a few questions here: Is this kosher in general? Are there tax implications to look at on my side or the family side? Is there any difficulty in the conversion of that loan into a proper business format? Is there a different and better way to do this? Thank you for any and all advice.
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Geeez, those questions....
You have a certain type of loan, owner occupied residential, as Wayne mentioned, there is no converting that loan it must be paid off.
You qualified for that loan under different requirements as a residence, multi family is a commercial loan with different requirements, one being more as a down payment.
No, they don't loan money for a down payment to qualify to obtain a commercial loan.
Apples and oranges.
Drop back and punt, you don't get the ball back until you get some basic real estate knowledge and know too, trying to buy a commercial property also requires management and experience, cash reserves as well as your money in the deal. Don't put a sign in the yard yet! Good luck :)