The Entrepreneur Forum | Financial Freedom | Starting a Business | Motivation | Money | Success

Welcome to the only entrepreneur forum dedicated to building life-changing wealth.

Build a Fastlane business. Earn real financial freedom. Join free.

Join over 80,000 entrepreneurs who have rejected the paradigm of mediocrity and said "NO!" to underpaid jobs, ascetic frugality, and suffocating savings rituals— learn how to build a Fastlane business that pays both freedom and lifestyle affluence.

Free registration at the forum removes this block.

Buying a house, Would appreciate some discussion.

Daytraderz

Contributor
Speedway Pass
User Power
Value/Post Ratio
100%
Feb 11, 2016
67
67
27
Virginia
I am 20 years old currently, a junior in college, and about to partially buy my first house. My business partner and I are going to be purchasing a house between March-May to turn into a rental property. We are cutting down operating expenses by doing all the house maintenance/reconstruction ourselves. This is just to get our feet wet, aside from me being a full-time student, my partner has a kid and is in an apprenticeship school for HVAC. This first property will allow us to get the feel for the business before I get out of school and before he gets his license. We are currently looking to buy the property with a mortgage, more specifically an FHA 203k loan (this allows you to buy distressed properties and you can get the money needed for renovations and time off the market).

My question is this: We are planning on splitting ownership rights and expenses 50/50 but he is getting the mortgage in his name. Is it possible, for me not to sign the mortgage (lack of credit lines), but still be on the deed? Any insight on this would be greatly appreciated, as well as any other tips and tricks you might have based on personal experience in the real estate industry.

Thank you
Joey
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

DCDeuce

Bronze Contributor
Read Fastlane!
Read Unscripted!
Speedway Pass
User Power
Value/Post Ratio
191%
Dec 3, 2016
68
130
Washington DC
I am 20 years old currently, a junior in college, and about to partially buy my first house. My business partner and I are going to be purchasing a house between March-May to turn into a rental property. We are cutting down operating expenses by doing all the house maintenance/reconstruction ourselves. This is just to get our feet wet, aside from me being a full-time student, my partner has a kid and is in an apprenticeship school for HVAC. This first property will allow us to get the feel for the business before I get out of school and before he gets his license. We are currently looking to buy the property with a mortgage, more specifically an FHA 203k loan (this allows you to buy distressed properties and you can get the money needed for renovations and time off the market).

My question is this: We are planning on splitting ownership rights and expenses 50/50 but he is getting the mortgage in his name. Is it possible, for me not to sign the mortgage (lack of credit lines), but still be on the deed? Any insight on this would be greatly appreciated, as well as any other tips and tricks you might have based on personal experience in the real estate industry.

Thank you
Joey

Hey @Daytraderz
It is possible for you to be on the deed, what needs to be done is have your agent draft an addendum after loan approval and after the appraisal but before closing that says something along the lines of "All parties hereby agree that Joey _______ is to be added to the deed of (Property address) as a non-occupied owner/Joint tenant. All other terms in the contract remain unchanged. I've done this before with a buyer whose wife was not able to get a loan due to poor credit scores.

Keep in mind this is possible in the DC Metro area where I live and practice real estate however your agent or the title company may have an issue with the addendum. Since your partner is buying the home as an owner occupied buyer there should be no issues but real estate is practiced differently in all parts of the US.

Good luck and rental properties are a great way to get your feet wet in Real Estate. Keep us updated with progress!
 

Scot

Salad Dressing Empire
EPIC CONTRIBUTOR
Read Fastlane!
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
472%
Jul 10, 2016
2,975
14,055
Florida
Aside from any debate about partner vs not having a partner (I'm still jaded so I won't add my $.02 there)...

In my 100% non legal opinion, it might be easier to establish an LLC and have the LLC own the property. You and your partner would be dual managers of the LLC. This would be a good option if you plan on purchasing more in the future.

If you only plan on one property, then a deed addendum would be the better option.
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

MJ DeMarco

I followed the science; all I found was money.
Staff member
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Rat-Race Escape!
Read Fastlane!
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
445%
Jul 23, 2007
38,079
169,495
Utah
Can you tell us about your partner? Asides from he's having a kid and getting an HVAC license?

The reason why I ask is because whenever I see the word "partner" I replace it with the word "marriage."

Are you getting married for the right reason? You wouldn't get married for convenience, the same goes with partnerships.
 

Red

Nigerian Lottery Prince
FASTLANE INSIDER
Read Fastlane!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
353%
Feb 23, 2010
1,135
4,007
Phoenix
My question is this: We are planning on splitting ownership rights and expenses 50/50 but he is getting the mortgage in his name. Is it possible, for me not to sign the mortgage (lack of credit lines), but still be on the deed? Any insight on this would be greatly appreciated, as well as any other tips and tricks you might have based on personal experience in the real estate industry.

Your options will vary by your state (in ways you can take title) & may ultimately be decided by your lender. Here in AZ, if you read the fine print on your deed of trust (we don't/very rarely have mortgages here), you will see that the bank can call the note due (meaning: they can say, pay us the full amount now or we can foreclose) if you alter the title/ownership on on the deed by adding another name. The only exception to this I know of is putting the property in a trust.

You really need to seek legal counsel on a variety of things, not limited to:

1. Ownership liability
2. How to take title
3. You & your partner's operating agreement & the consequences if breached
4. Selling out/ending the agreement
5. The seasoned lawyer you consult will come up with a TON of things you've never even thought of & I can't recall here.


First things first, go speak with a reputable & experienced real estate attorney who has clients who invest.

The not-so-funny joke of this industry & this scenario: just go ahead & sue your buddy now, vowing never to speak to each other again because you'll save time & money to get the same end result.

You're much less likely to have this end result if you do prep work up front & by prep work I mean working closely with an attorney to draft everything I mention above & agree upon terms with your partner.
 

MJ DeMarco

I followed the science; all I found was money.
Staff member
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Rat-Race Escape!
Read Fastlane!
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
445%
Jul 23, 2007
38,079
169,495
Utah
The not-so-funny joke of this industry & this scenario: just go ahead & sue your buddy now, vowing never to speak to each other again because you'll save time & money to get the same end result.

Ha Ha!
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

G-Man

Cantankerous Contributor
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Fastlane!
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
544%
Jan 13, 2014
1,990
10,828
just go ahead & sue your buddy now, vowing never to speak to each other again because you'll save time & money to get the same end result.

Repped.

@Daytraderz, @Red Just saved you a bunch of money and a friendship :clench:
 

Jon L

Platinum Contributor
Read Fastlane!
Speedway Pass
User Power
Value/Post Ratio
272%
Aug 22, 2015
1,649
4,489
Bellevue, WA
Your options will vary by your state (in ways you can take title) & may ultimately be decided by your lender. Here in AZ, if you read the fine print on your deed of trust (we don't/very rarely have mortgages here), you will see that the bank can call the note due (meaning: they can say, pay us the full amount now or we can foreclose) if you alter the title/ownership on on the deed by adding another name. The only exception to this I know of is putting the property in a trust.

You really need to seek legal counsel on a variety of things, not limited to:

1. Ownership liability
2. How to take title
3. You & your partner's operating agreement & the consequences if breached
4. Selling out/ending the agreement
5. The seasoned lawyer you consult will come up with a TON of things you've never even thought of & I can't recall here.


First things first, go speak with a reputable & experienced real estate attorney who has clients who invest.

The not-so-funny joke of this industry & this scenario: just go ahead & sue your buddy now, vowing never to speak to each other again because you'll save time & money to get the same end result.

You're much less likely to have this end result if you do prep work up front & by prep work I mean working closely with an attorney to draft everything I mention above & agree upon terms with your partner.
I had the good fortune to try this approach. Things were going along quite well until I insisted that everything be put in writing. That's when all the issues came up. 'oh i meant 20% of the profits' (then later) 'for this one particular section of the company' (then later) 'for the first year.' (my response) 'oh so that's what' 'I'll give you 20% of the company' means. I thought it meant, 'I'll give you 20% of the company.'

So yeah, talk everything out beforehand. I did this all without an attorney. Is having an attorney a smart thing to do? Yeah. In my case, I was able to blow up the partnership without one.
 

Rdayley

New Contributor
User Power
Value/Post Ratio
133%
Feb 22, 2017
6
8
54
Clarksville TN
Yes, you can be added to the deed and not be on the mortgage. I do this all the time for my clients that buy homes but they are normally for personal use.

As a business, I would go the LLC route. Make sure you have a lawyer write up everything and you run it as a business, nothing ruins a friendship faster than money so make sure you are both 100% clear what is expected from both of you.

Good luck to you two. If you every want to venture into the Clarksville TN/Nashville TN Real Estate market look me up www.clarksvillehomesales.us
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.
Last edited:

Daytraderz

Contributor
Speedway Pass
User Power
Value/Post Ratio
100%
Feb 11, 2016
67
67
27
Virginia
Can you tell us about your partner? Asides from he's having a kid and getting an HVAC license?

The reason why I ask is because whenever I see the word "partner" I replace it with the word "marriage."

Are you getting married for the right reason? You wouldn't get married for convenience, the same goes with partnerships.

My partner and I met about two and a half years ago, have been investing together, building knowledge together, and building an investment future together. He and I are both very big on self development, mutual respect to all, and understanding. We are getting "married" because we both want to prevent ourselves from becoming one of sheep, we both effortlessly love real estate and investing, and we are both from the same hometown. He is established and I am not, our partnership is going to bring both of us to a higher level than we were before: through the ups and downs. We have done self-evaluations on ourselves and each other as well.

I am not concerned with the partnership aspect of this, if it goes south, it goes south and we will both learn from it one way or another. But as for, we have minimized that risk I believe and are going to be able to truly help one another become more enlightened in life.
 

Daytraderz

Contributor
Speedway Pass
User Power
Value/Post Ratio
100%
Feb 11, 2016
67
67
27
Virginia
I had the good fortune to try this approach. Things were going along quite well until I insisted that everything be put in writing. That's when all the issues came up. 'oh i meant 20% of the profits' (then later) 'for this one particular section of the company' (then later) 'for the first year.' (my response) 'oh so that's what' 'I'll give you 20% of the company' means. I thought it meant, 'I'll give you 20% of the company.'

So yeah, talk everything out beforehand. I did this all without an attorney. Is having an attorney a smart thing to do? Yeah. In my case, I was able to blow up the partnership without one.

Thank you, I will make sure that my partner and I discuss everything and always attend attorney meetings together. Honesty is a big virtue with both of us, not just as partners but in life. Without honesty, nothing makes sense.
 

DHurt

Contributor
Read Fastlane!
User Power
Value/Post Ratio
244%
Jan 29, 2017
9
22
36
Charlotte, NC
To those suggesting an LLC (which is the route I take and recommend on investment properties with partners) the OP would not be able to use this vehicle if he finances using the FHA 203k since that product is only for owner-occupied non-investment property.

@Daytraderz you may want to find out more about the rules surrounding the FHA 203k. Its probable that you both, or one of you, will need to actually occupy the property for a time...and the lender may take issue with you being added to the deed as a 50% owner since your business partner should technically be buying it for himself to live in.
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

ArtRyumin

Contributor
FASTLANE INSIDER
Speedway Pass
User Power
Value/Post Ratio
114%
Jan 12, 2017
50
57
34
New Zealand
Good luck with the venture!

On a current property deal i'm still in which is a lifestyle living block development from bareland to a 6 bedroom house for sale. It started with me and a friend going into it once i realised i couldn't afford the deal by myself so i asked him to join in. We had different 'costs of getting in' but went 50/50 on the mortgage and expenses. All was going well until we both started getting some cash flow issues (we went into a new commission sales job and i left full time work to get do full time consulting to fuel the 'big idea'
It then turned into us trying to sell the uncompleted project as we ran into some variations that required some more capital input only to be shot down by a lower auction figure then what we needed to get out at break even point. I then scrambled to find an investor, which all roads went to my dad and we've been having to work on the property our selves which has it's pros and cons but enables us to complete the project and put it on the market for sale

Without having any legal contracts or documentations between me and my initial partner it could have made things a lot easier, we ended up having to make a legal contral when my dad took over his share and the costs to complete it which took him out of the deal. Leaving us needing to refinance the property into a standard mortgage as currently it's on a higher development load about 2.5 % higher.

Try be really organised about the renovations and get it done asap or what happened to us was we didn't do our duedilligence on the builder and gave him too much trust who took much longer than needed and still needing to complete the property after paying the builder WAY too much, again a lesson. Also discuss that if it becomes apparent that someone is able to work more hours on the property that the extra work is recognized otherwise resentment comes in and that's best to try be proactively prevented.

Have you checked to see if any of the renovations will require new local building authority consents? I'm not familiar with US laws but in NZ doing renovation works could trigger a building consent which could be a unplanned expense if you're not familiar with requirements id though i mention it to check it out.

Exit strategies or maybe even vall them oh shit scenarios are overlooked and i think are very important. Situational change could make one need more capital for something within a short notice and the other might not want that option.
 

Post New Topic

Please SEARCH before posting.
Please select the BEST category.

Post new topic

Guest post submissions offered HERE.

Latest Posts

New Topics

Fastlane Insiders

View the forum AD FREE.
Private, unindexed content
Detailed process/execution threads
Ideas needing execution, more!

Join Fastlane Insiders.

Top