Quote from @Bill B.:
If you’ve been flipping home for the last five years, put down half the money and split it 50/50. If the downpayment is at least 20-25% (this is a rental right? You have almost zero risk as prices would have to crash 15-20% before you would only break even. BUT, this will probably prevent you from buying a primary home for yourself or any rentals in your own name. As you will have all the debt and no income.
I can’t think of a good way except you putting down half. If it’s supposed to be short term I GUESS you could ask for 5% plus 5% more every year the mortgage is in your name? That should be a good incentive for them to get your out of the mortgage. But you might also hit a point where your partner realizes they’re never going to be able to pay off your mortgage and they’re going to lose the deal anyway, so why not walk away?
What’s you’ve described is pretty much a lose lose deal? Unless you can go 30 years without buying any more properties? If so then maybe just ask for 1/2 the banks interest in top? If the banks charging 5% you charge 2.5% and just get half the interest on bank statement?
Hey Bill! Thanks for the extremely detailed reply. I really do appreciate it. I think you may have made assumptions based on some lack of information. I probably should have added more detail to my post. My income from my day job is quite high plus my wife's income also helps whereI can buy more properties. As a matter of fact, I own a primary home and a rental property already to myself. And this
existing property to which im referring to
is also flip which I also own under my name.
So basically the current house in question is an existing flip between the both of us. We have already gone 50/50 (I paid the downpayment plus carrying costs while he paid for all labour and materials - he's the handy one). However, he wants to buy me out ( he will pay back my costs plus my profit based on the listed sales price). He has the capital to do this. However, what he doesn't have is high enough income to show (on paper) that he can afford the home. His reason for buying the property is that he wants to have a rental to himself while he can take advantage of the 3.5% interest rate on the property. And yes, he wants to hold the property long term. The rental market here in Hamilton, ON is quite promising. He can rent out top and bottom floors and be netting an estimated $1200 profit per month. So I'm not worried about him not making the payments. And if he does stop making payments, I can stipulate in contract that I have the right to sell the property (given the property stays under my name).
I like the offer because i get back all my initial investment plus my share of the profit. I can use this money to buy another property when I move to the US as my primary. I am not sure if the added information changes your answer. Basically, how much percentage of the property should I keep? How much is my risk worth?
