Hi All,
Im very interested to see your perspectives on this.
My siblings and I (three of us) have been offered a considerate deal my parents.
I will try and be as detailed as possible;
• There was an offer made to us by my parents to purchase one of their investment properties well below cost price.
• The house is currently valued at $420,000 which has $100,000 owing to it.
• The deal is that the three of us give a total of $240,000 to my parents.
• The house will go on rent.
• The rent collected will go into my parents $100,000 loan to pay this off slowly (around 8 years).
• We will not collect any rent to service the 240k loan.
• In regard to the 240k loan. We will pay the interest of 500 dollars each (estimate) pcm to hold on this house for future growth.
• My parents have indicated that there will be some additional funds in the rent so this will be used to pay the rates, water services and any other expenses.
• When the $100,000 is paid off the house title will be transferred into our names and we can start collecting rent for this property.
• The 240k loan will be secured against this properly so total owing will be $340,000 current equity will be around $80,000
• We will be able to ‘tap’ into the equity as required.
• We plan to sell the house after 8 years
• This will be well documented with required agents.
I guess the main reasoning behind this deal would be that my parents would like to assist in building there children’s wealth.
If they were to just to sell the property through normal methods let’s say @ $400,000 I think this would be the very rough break down;
400,000 – sale price
100,000 – pay off existing loan
40,000 – CGT for property, has been rented for 9 years is only a estimate figure
10,000 – agent fees & misc
= 250,000
Its visible that they will still be losing out on the deal but not as much as I anticipated (perhaps?).
My other concern is my sister runs her own business and my brother is still at university. Although they are both able to afford 500 pcm they will not qualify for finance.
So this leaves me stuck with the bourdon of putting the finance in my name and I guess a small risk of relying on serviceability from them. This will then slow down any other plans I may have down the pipeline. So my point here would be that I will negotiate with them that perhaps I have equity rights to this property for a period of time to assist with my other projects simply to balance this inconvenience.
What do you think….. good idea? bad idea? your views?
Thanks in advance.
Im very interested to see your perspectives on this.
My siblings and I (three of us) have been offered a considerate deal my parents.
I will try and be as detailed as possible;
• There was an offer made to us by my parents to purchase one of their investment properties well below cost price.
• The house is currently valued at $420,000 which has $100,000 owing to it.
• The deal is that the three of us give a total of $240,000 to my parents.
• The house will go on rent.
• The rent collected will go into my parents $100,000 loan to pay this off slowly (around 8 years).
• We will not collect any rent to service the 240k loan.
• In regard to the 240k loan. We will pay the interest of 500 dollars each (estimate) pcm to hold on this house for future growth.
• My parents have indicated that there will be some additional funds in the rent so this will be used to pay the rates, water services and any other expenses.
• When the $100,000 is paid off the house title will be transferred into our names and we can start collecting rent for this property.
• The 240k loan will be secured against this properly so total owing will be $340,000 current equity will be around $80,000
• We will be able to ‘tap’ into the equity as required.
• We plan to sell the house after 8 years
• This will be well documented with required agents.
I guess the main reasoning behind this deal would be that my parents would like to assist in building there children’s wealth.
If they were to just to sell the property through normal methods let’s say @ $400,000 I think this would be the very rough break down;
400,000 – sale price
100,000 – pay off existing loan
40,000 – CGT for property, has been rented for 9 years is only a estimate figure
10,000 – agent fees & misc
= 250,000
Its visible that they will still be losing out on the deal but not as much as I anticipated (perhaps?).
My other concern is my sister runs her own business and my brother is still at university. Although they are both able to afford 500 pcm they will not qualify for finance.
So this leaves me stuck with the bourdon of putting the finance in my name and I guess a small risk of relying on serviceability from them. This will then slow down any other plans I may have down the pipeline. So my point here would be that I will negotiate with them that perhaps I have equity rights to this property for a period of time to assist with my other projects simply to balance this inconvenience.
What do you think….. good idea? bad idea? your views?
Thanks in advance.
Maybe there is more explanation that I didn't follow? Why do your parents want the $240k, and why should it come from you and your siblings?
