Exit strategy help

[Kieran Dowling]

So my parents are buying my first fixer upper for me all cash in there name. 

We have created a contract that states i have to pay them back within two years via  refi to get it out of their name and into mine. 

What would be the best way to go about this. Heloc, cash out or any other strategies?

[Clint Jusino]

Quote from @Kieran Dowling:

So my parents are buying my first fixer upper for me all cash in there name. 

We have created a contract that states i have to pay them back within two years via  refi to get it out of their name and into mine. 

What would be the best way to go about this. Heloc, cash out or any other strategies?

Wow your parents are a blessing! How about seller financing? Since they are your parents I feel creative financing is the best way to pay them over time. 

[Kieran Dowling]

I have offered that and they do not want to carry anything for more that two years. I wish i could do that! 

Right now we have a contract that states we have a ballon payment/what i owe them is due before or at 2 years. 

I am paying them 500 a month untill i pay them off. 2 years max.that is why i am looking at refinacing

[Clint Jusino]

Quote from @Kieran Dowling:

I have offered that and they do not want to carry anything for more that two years. I wish i could do that! 

Right now we have a contract that states we have a ballon payment/what i owe them is due before or at 2 years. 

I am paying them 500 a month untill i pay them off. 2 years max.that is why i am looking at refinacing

You can look into a creative method called Gift of Equity. I did that with my parents and it worked out perfectly when i bought their house. You can DM me for more details.

[Carini Rochester]

Work on your credit score. Increase your income. File income tax returns. Make improvements to the house to raise the appraised value. At 21 months go into your bank, or see a mortgage broker and apply for a mortgage. HELOC won't work unless you have enough equity to justify the line. HELOCs generally are not so well suited for long-term debt as a mortgage.

[Calvin Thomas]

Quote from @Kieran Dowling:

So my parents are buying my first fixer upper for me all cash in there name. 

We have created a contract that states i have to pay them back within two years via  refi to get it out of their name and into mine. 

What would be the best way to go about this. Heloc, cash out or any other strategies?

Nothing worse than owing money to a family member. Family dinner tastes different when you owe someone else money. If it was me, once you've repaired it and rented it out, refinance or HELCO the building. However, you will have some difficulty there since it's not in your name. Should a family issue arise, you have zero ownership and basically zero legal say. Therefore, the building should be purchased in an LLC, where everyone is a partner, and you can then buy them out at an agreed price. As it is right now, it is not a good deal for anyone. I can see a problem down the line where it can cause some friction within your family. You don't want that. Put together an agreement between you and your parents, and with an agreed price, you can buy them out once the home has been fixed up and refinanced. As always, speak to a lawyer to ensure everything is done correctly.

Even the best intentions can go bad. No building is worth your family.

[Kieran Dowling]

Quote from @Calvin Thomas:

Quote from @Kieran Dowling:

So my parents are buying my first fixer upper for me all cash in there name. 

We have created a contract that states i have to pay them back within two years via  refi to get it out of their name and into mine. 

What would be the best way to go about this. Heloc, cash out or any other strategies?

Nothing worse than owing money to a family member. Family dinner tastes different when you owe someone else money. If it was me, once you've repaired it and rented it out, refinance or HELCO the building. However, you will have some difficulty there since it's not in your name. Should a family issue arise, you have zero ownership and basically zero legal say. Therefore, the building should be purchased in an LLC, where everyone is a partner, and you can then buy them out at an agreed price. As it is right now, it is not a good deal for anyone. I can see a problem down the line where it can cause some friction within your family. You don't want that. Put together an agreement between you and your parents, and with an agreed price, you can buy them out once the home has been fixed up and refinanced. As always, speak to a lawyer to ensure everything is done correctly.

Even the best intentions can go bad. No building is worth your family.

 yeah. this wont happen. but thanks for the thought

[Chris Barrett]

Technically in 2 years they will be selling the house to you, so it's not a HELOC or a cash out refi or anything else, it's a purchase where they are selling you the house for the price they paid 2 years ago and you need to finance it at at least that amount. That means you need to have the house be worth 20% more in 2 years than when they purchased it (unless this could be your first house, and you can get a 5% down loan, etc)

[Scott Wolf]

Quote from @Kieran Dowling:

So my parents are buying my first fixer upper for me all cash in there name. 

We have created a contract that states i have to pay them back within two years via  refi to get it out of their name and into mine. 

What would be the best way to go about this. Heloc, cash out or any other strategies?

 I'd be careful here.  What your saying isn't an arms length transaction.  If they're buying it for you all cash, you should just buy it and have them be the first mortgage.  That way when you go to refinance, things will be simpler.

[Erik Estrada]

Quote from @Kieran Dowling:

So my parents are buying my first fixer upper for me all cash in there name. 

We have created a contract that states i have to pay them back within two years via  refi to get it out of their name and into mine. 

What would be the best way to go about this. Heloc, cash out or any other strategies?

Hi Kieran,

Are your parents still on title? Are you also on title? You will just need to make sure you are able to qualify for a refinance depending on the loan balance to payoff your parents 

[Pradeep Patel]

Nice! I wish my parents helped on my investment journey. I second on the seller refinancing, why pay bank interest? Keep it in the family:)

[Gregory Wilson]

What you have described is a garden variety land contract with a two year balloon. You don't have to paper it that way, but that is what it is. 

[Kieran Dowling]

Quote from @Gregory Wilson:

What you have described is a garden variety land contract with a two year balloon. You don't have to paper it that way, but that is what it is

Can you explain this a little more?

[Gregory Wilson]

Quote from @Kieran Dowling:

Quote from @Gregory Wilson:

What you have described is a garden variety land contract with a two year balloon. You don't have to paper it that way, but that is what it is

Can you explain this a little more?

Gemini AI can help:

Key features of an Ohio Land Contract:

• Installment Payments: The buyer agrees to purchase the property through regular payments over time, rather than a full upfront payment.
• Seller Holds Title: The seller retains legal ownership of the property until the full purchase price is paid.
• Agreement Length: The contract typically extends beyond one year.
• Property in Ohio: The land in question must be located in the state of Ohio.
• Improved Property (usually): Land contracts in Ohio normally involve property with a dwelling on it (a house).

Here are some additional points to consider:

• Recorded Contract: A valid land contract must be recorded with the appropriate county recorder's office.
• Contract Content: The contract should include specific details like the names of the parties, property description, purchase price, payment terms, and down payment amount.

[Connor Hibbs]

The biggest thing is going to be whether or not this is an investment property or if you plan on living in the property once rehab is completed. 

If it's an investment property, then I think your best bet would be to move the property into an LLC with you and your parents. Once it is completed and the value has gone up then you should be able to refinance enough to pay your parents back. You'd need to go with a cash-out refi since they purchased in cash and have no existing liens.

If this is going to be your primary residency then I'd recommend the HELOC advice from above.