I think I screwed up Need an expert

[billy]

Ok this is sord of a long story but hear me out...

I wanted to get into real estate a little bit and I was talking to my uncle who did it here and there and he offered me to be apart of the deal.

I agreed and the deal was I invest 11,000 dollars and buy the house as a first time home buyer and get the 8000 dollar new home buyer thing that was going on. The 8000 went toward the 11000 and i have now a total of 19000 dollars into this house and this was over a year ago.

I don't have to make payments on it, but my uncle and his friend keep adding more and more shit to this house that Its getting ridiculous and I just want out. Is there anything I can do?

I should of never gotten involved with family I know now but I just want to know if there is anything I can do.

The house looks worse than it did when we bought it because of all the stuff they are doing to it. And the appraiser appraised it for less than I got in it. But I can still get out of the debt if I just sell it. but I also want to get my 19000 back

Can he buy it from me for the amount it appraised at, and then take out a home equity to pay me back?

any ideas or suggestions is appreciated

 

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[458]

Depends on the contract you two wrote out. You could try and talk to him to get your equity out, maybe offer him some kind of discount for pulling out early. If he disagrees then your introuble. Attorney fees will eat up all the money your trying to get back in a very short period of time.

 

[GlobalWealth]

but I also want to get my 19000 back

For starters, you don't have $19k invested, only $11k.

What does your contract with your uncle and other partners state?

Whose name is on the deed? Whose name is on the mortgage note? Personal guarantee?

What is the intended purpose for the house? Flip? Rental?

I would assume here that you are the responsible party on the mortgage note. If you are also the name on the deed, you are the legal owner of the house. Kick your uncle out and do the deal alone.

Or at least negotiate with him letting him know you have the leverage.

If you are the responsible party on the note and he is on the deed, you are screwed unless you have a clear contract.

Have you tried just talking to him and expressing your concerns?

 

[Russ H]

Talk to him over a beer.

Tell him - NICELY-- how you feel.

I would hesitate telling him that you feel the changes/additions have hurt the value of the house-- BE DIPLOMATIC.

Tell him you want out, and want to know how. Tell him you want to get your investment back ($11K, NOT $19K), and figure that with all the improvements, that should not be a problem.

HOWEVER-- real world:

1. We are in the midst of a recession, and RE values are HORRIBLE right now-- and going down further. Even if you did NOTHING to the house, it will appraise for less.

2. When you sell a house, it costs money-- either w/a realtor (using MLS)-- 6%, or doing it through other means (RE attys, etc). If you don't know what you're doing here (ie, if you've never sold a house before), you WILL get screwed. RE is not for sissies-- you need experience to do this stuff. DO NOT trust this to your uncle (ie, having him do all of the transaction instead of a realtor or RE atty), as you will ALSO get scrod.

3. Add up #1 and #2, and here's what you get:

1. Buy a house for $100K
2. Now it's worth $95K (market went down)
3. You need to pay a realtor or other RE professional to sell it (=$6000 cost)

$100K - $5K depreciation - $6K cost to sell = $89K

If the above numbers are just an example-- it would mean you'd end up w/about $8K, prolly less ($6K after closing costs and other buyer accommodations).

In other words, dude, you don't have the $11K left in the deal, since your equity share is the first to go.

Count yourself lucky that you don't have to pay rent, or make payments.

But also realize that if your uncle stops making the payments-- YOUR CREDIT RATING is what will get hosed.

Realize that unless you want to start making mortgage payments, you need to be real nice to your uncle. And learn how to talk this through, so that both of you can come up with a win-win.

-Russ H.

 

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[John C.]

Billy, I don't want to be offering tax advice but it from what you have said, you might have some tax problems. The credit was for first time home buyers - the house was to supposed to be your main residence. If you sell or otherwise dispose of the house or it ceases to be your primary residence, there is a re-capture of the credit.

I would seek some legal/tax advice about the entire transaction. The IRS takes a rather dim view of folks who claim a credit when they are not entitled to it.

It also seems like you did not have a good shared understanding when you got into the deal. Getting into business deals are a lot like getting into affairs - easy to get into but can be rather messy getting out of. Be extremely careful when getting into any business arrangement. Make sure everyone is on the same page, that rights and responsibilities are very clear.

A good rule when you are in a bad situation is to cut your losses and move on.