Financial Advisor · Saint Paul, MN · Member since 2016 · 190 posts · 143 votes
Okay, so this is a rabbit trail post but...
I'm going through a divorce & looking for options to pay my soon-to-be ex out. I may be forced to sell my primary home as I can't get a line of credit large enough to pay her out. If I sell, I likely won't have enough money for a down payment on the next house.
But... My 3 kids (15, 17 & 19) each have a large enough chunk of money that if we put it all together, we could make it happen. I just don't know how it would work to structure the ownership & finances.
Hypothetically, they would have the money to put down, but I would be paying the mortgage & doing all improvements. So how would I account for their share of appreciation in the future? Ownership structure etc.? Rabbit trail, for sure. Feel free to tell me all the ways why this is a stupid idea.
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
3y
You could form an LLC and y'all could be members regardless of age. That would structure the ownership and maybe the finances. Make sure your divorce decree has no clawbacks! Don't buy anything until your divorce is finalized. All the best. And I never said this is a good idea. I just noticed you are a "Financial Advisor" so scratch what I wrote!!
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
3y
You could form an LLC and y'all could be members regardless of age. That would structure the ownership and maybe the finances. Make sure your divorce decree has no clawbacks! Don't buy anything until your divorce is finalized. All the best. And I never said this is a good idea. I just noticed you are a "Financial Advisor" so scratch what I wrote!!
As @Bjorn Ahlblad mentioned, an LLC with an operating agreement specifying each owner and their capital contributions would probably be best for this scenario. In the operating agreement you would care for such things as splitting the finances, decision-making and management, etc. You could do the same with a tenancy in common (TIC) and a co-ownership agreement. LLC might be best because it provides the most flexibility in terms of changing and transferring ownership interests over time, which might be useful given that your children may want to move on sometime in the future.
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
3y
If you'll still want access to conventional GSE financing (vs commercial, portfolio or DSCR), owning as TIC with %s listed would probably be preferable to an LLC.
They're not all 18 yet, but if they were with TIC you could then have a simple JV agreement between you and them. For general information TIC owners need to be 18+ vs LLC members in most states can be minors as mentioned.
Another option of course is to just rent a place. I have kids and can't imagine ever asking them to anchor themselves to some house as they navigate so many important life path choices soon.