Looking for Advice on Possible Family JV

[MechTech]

So i have an interesting opportunity come about and i am looking for some possible pros and cons from those of you who would like to post them. This could perhaps be a great learning session for myself and others.

My mother in law is renting one half of a side by side here in Winnipeg. Her landlord is planning to sell the property and has asked her to move by next year. She has heard that i am learning about Real Estate investing and plan to eventually begin investing in buy and hold (Based on the ACRE system) and has mentioned to me that she would like to stay in her place and maybe have me consider buying it and renting it to her. I asked her why she didn`t just buy it and pay a mortgage and she just would rather rent and not buy a home. She is the kind of person who likes to keep things very very simple and thats fine. She has money that she even offered to put the Downpayment and closing costs in so as to make it happen. The place is affordable and is in good shape, did some Due Dilligence to it just briefly while i just kind of humored the situation, but while i have my own views as per pros and cons, i am still in a position where as to begin on my own with my own money and get a property going within the next few months. While i do have time to think about this possible opportunity, i would like to hear some thoughts from some of you here who may look at things from a different angle. I have till january to decide which gives me alot of time to play with my own money and learn alot more about the ACRE system and Investing in general.

There are alot of pros to this and she is SUPER tenant! I mean this place is spotless and she NEVER calls her landlord to do anything unless she absolutely has to. She would like to change things cosmetic wise and what not but would rather rent from me, her son in law, than buy it out right. So perhaps this would benefit both of us as a JV type arrangement.

Please advise Guru`s! This is a great opportunity for me to learn a few things as well.

Thanks Everyone!

 

[gwasser]

QUOTE (MechTech @ May 24 2010, 11:19 AM) So i have an interesting opportunity come about and i am looking for some possible pros and cons from those of you who would like to post them. This could perhaps be a great learning session for myself and others.

My mother in law is renting one half of a side by side here in Winnipeg. Her landlord is planning to sell the property and has asked her to move by next year. She has heard that i am learning about Real Estate investing and plan to eventually begin investing in buy and hold (Based on ...........

Thanks Everyone!


First thing that comes to mind is whether you can buy it for a good price. You can do a market survey using MLS for houses in the neighbourhood. By being pro-active you may be saving the seller a real estate commission and the pain of the sales process. On the otherhand the seller may see you as eager and trying to get a higher price. So, first determine market value and then try to reduce that price by a further 2.5% (half the real estate commission).

Still you will have to do your dilligence in terms of whether the price makes sense considering the rent you`re getting from your mother in law and how she may take to rent increases from her beloved son in law. I am sure others will comment on the finer points of a JV. Also ensure that after financing costs you have postive cash flow.

 

[invst4profit]

Having a friend or worse a relative as a tenant can go very wrong regardless of how nice a tenant she is.
As advised though it really only comes down to the numbers.
If the purchase price is in line with the rent or you can raise her rent to the right point you could consider going in with her, but I wouldn`t.

My personal policy is "family is too important to risk letting them come between me and my money".

 

[Thomas Beyer]

QUOTE (MechTech @ May 24 2010, 11:19 AM) ..
Please advise Guru`s! This is a great opportunity for me to learn a few things as well.
Why not IF the numbers make sense to you (as the investor) and her as the tenant.

Talk to owner and ask him what he would consider. Then compare that price with comparables.

Then have a super tenant with a normal lease !

 

[MechTech]

Thanks for the input everyone. Ill have some time to think it over so playing with some numbers and talking with her about it in detail will eventually lead to a decision.