Rental Property Investor · Friendswood, TX · Member since 2020 · 14 posts · 11 votes
Say I find a good deal. All the numbers work out. My father in law pays cash for the house 100k. I then put 25k into rehabbing it. Now I want to pay my father in law the 100k back and try to get most of my 25k back. Would the next step be going to a bank and saying I need to get a loan for this house that my father in law owns? Or would it be as simple as getting a contract together taking it to a title company. My father in law sells me the house and my lender (a bank) mortgages the house in my name? The bank then releases 100k to my father in law? And 25k to me? And I have a mortgage for around 160k (little over 20% equity)
Could someone please simplify the processes the easiest way possible. I have a father in law that is ready to fund my deals if I do the rehabs. I just need to Insure that I can get his money back and switch everything over to my name under a mortgage.
@Alex Smith, what does your FIL get out of this? There isn't any benefit in your initial post. In fact, with closing costs, he will have lost money on the deal.
Disregarding that fact, the simplest thing to do is have you buy the house and have your FIL provide you with 100% financing for the purchase. Then you can refinance after the rehab without adding additional transactional costs for your FIL. Will you be renting it out, or living in it?
@Scott Wolf my FIL just wants to help me out. I have sorta been through the idea of him just giving me 100k but My lender at the time said it wasn’t possible for him to gift me 100k. So I guess what I have to do is have him pay cash for the property including any fees for closing. Then I will go in a rehab with my money. Rent it out and then refinance the property and pay my FIL back everything he spent on the deal and hopefully pay him extra for funding the deal.
@Alex Smith, him paying cash will only add transactional costs to this process. Have him be a private lender to you at 0% or 1% interest with 100% LTV, so you purchase the property. Not sure what gifting the money to you has to do with anything.
What I have seen people do is borrow the FULL amount of the property and the rehab. This way when you go to refinance, you can get the 125k refinanced. It will be a rate and term refinance, not a cash out refinance.