Financing with Family via an STR BRRRR

[Christin Prince]

Hi everyone,

We are going to purchase a house w/ my mom and would like some recommendations on how to best structure the deal. Given it's the holidays I can't call my CPA and lawyer right now, so in the interim hoping some of you all will need a break from family, be perusing Bigger Pockets and be graciously inclined to answer :) 

Price of house $375k

Renovation Costs Approx $200k

ARV $700k

We have enough to do the initial purchase in cash from my mom and money in a HELOC for the renovations from me and my husband. Therefore, based on conversations w/ my CPA in order to write-off the renovations, we (or one of us?) need to be on the title. The plan is to refinance to get as much cash back out as possible and we have a mortgage lender lined up and ready to go. My goal upon financing with the bank in my name, is to pay my mom back the $375k purchase price plus give her $20k as interest. Then whatever other cash from financing we pay back as much of the HELOC as we can. Doing this also, to ensure she only pays taxes on the $20k not the $375k.

First question, If my mom and husband were on the title as tenancy in common, after the renovations could they then "sell" it to me via a bank loan, sooner than 6 months post purchase (the waiting period I have heard banks require for you to refinance and I think finance a house if your name is on the title). My broker says I can qualify without my husband's income.  

Second, as for how the title is put into both names (whether it be mom/husband or mom/me), I read about tenancy in common but it always seems like it's a % ownership of the house. Is that true or can it be a flat amount each person "owns" and therefore is given upon sale? If it has to be a percentage, then can she be 99% and we 1% initially, so the bulk of her repayment is via purchase of the house and ours is mostly renovations and THEN before we sell, we change that percentage to equal the flat amounts we want each to get? All of this legally documented of course and how long does it take to change this and does it have to be filed with the county before processing the new title / closing documents?

Thank you all for listening and offering any advice possible and Happy Thanksgiving!

Cheers,

Christin