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Old 04-27-2011, 06:25 PM   #1
zmyworldz
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My parents wants to buy a house but put it under my name? GG deal?

I've searched the forums and there was a topic about this but everyone said the op should be cautious and suspicious.

This deal is totally different I was wondering what are the pros and cons for having a house under my name?

My parents have multiple (3+) houses under their name, but they are really illiquid right now and they do not want to purchase the house with a mortgage.

So whats my play? The house is 100k and it could probably be rented out for 1000+. Is this a good +EV situation for me? I feel like after QE2 the dollar will be inflated even more and my house would appreciate pretty nicely + the new inflation.

Are there any cons of owning a house? I'm a college graduate and I'm broke as **** but I enough to get this house.

Would it be possible to use this house as leverage for my future endeavors in real estate?
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Old 04-27-2011, 06:45 PM   #2
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Re: My parents wants to buy a house but put it under my name? GG deal?

They don't want to buy a house in your name they want you to buy a house.
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Old 04-27-2011, 06:46 PM   #3
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Re: My parents wants to buy a house but put it under my name? GG deal?

Would need more details to really know but parents having 3+ houses and being "illiquid" sounds to me like they are in big trouble and you will end up paying for it somehow. Also doesn't make sense that they "wouldn't want a mortgage" if they are illuquid as their lack of liquidity should mean they don't have them money. I assume this means they want to put the mortgage under your name which sounds like a bad idea.
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Old 04-27-2011, 06:47 PM   #4
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Re: My parents wants to buy a house but put it under my name? GG deal?

The problem is that this house is completely off the map from where I live. Say I live in Washington and the house that I'm buying is in Hawaii... will there be any adverse effect for me in the future?
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Old 04-27-2011, 06:48 PM   #5
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Re: My parents wants to buy a house but put it under my name? GG deal?

I absolutely know that they could pay for the house but they don't want to put it under their name.
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Old 04-27-2011, 07:08 PM   #6
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Re: My parents wants to buy a house but put it under my name? GG deal?

they want you to buy a house as an investment so that you will profit from it?
or they want you to buy it as an investment for them and they will profit from it?

either way i would tell them to go pound sand because you dont seem to be knowledgeable about real estate so you have no way of knowing if the house is a good deal. and if they want the profits for themselves then I would change my phone number and never speak to them again.
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Old 04-27-2011, 07:18 PM   #7
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Re: My parents wants to buy a house but put it under my name? GG deal?

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they want you to buy a house as an investment so that you will profit from it?
or they want you to buy it as an investment for them and they will profit from it?

either way i would tell them to go pound sand because you dont seem to be knowledgeable about real estate so you have no way of knowing if the house is a good deal. and if they want the profits for themselves then I would change my phone number and never speak to them again.
The house is pretty much a +EV situation since its 100k in a popular location and it is easily rentable for 1000 minimal. Yes, they want the profits for themselves, but that would be the least I could do when they helped me with my college education.

I'm just wondering what are the consequences of owning a house under my name? More taxes? Any advantages? I could leverage up and get another house as long as my cashflow is greatly positive, right?
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Old 04-27-2011, 07:26 PM   #8
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Re: My parents wants to buy a house but put it under my name? GG deal?

you arent going to have "cashflow" to "leverage" if they get all the profits.

the consequences are that you assume 100% of the risk of owning a $100,000 debt and they collect 100% of the rewards.
if they are already overstretched because of three other houses then there is a greater than 0% chance that they wont be able to pay and you will get screwed.

if you feel guilt because they helped you with college then pay them $20,000 and never speak to them again.

I want to punch your parents in the face right now.
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Old 04-27-2011, 07:42 PM   #9
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Re: My parents wants to buy a house but put it under my name? GG deal?

tell them to get ****ed
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Old 04-27-2011, 07:42 PM   #10
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Re: My parents wants to buy a house but put it under my name? GG deal?

if you want to give your parents money, just give it to them. if you want to buy a house and try to earn rental money, do that. but don't think that the two events are related just because they frame it like they're buying it. you're buying it. your money, your risk, their profit.
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Old 04-27-2011, 07:50 PM   #11
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Re: My parents wants to buy a house but put it under my name? GG deal?

This really doesn't make any sense. You might want to keeps tabs on your credit since they obviously know you social security and could try to open credit cards in your name.
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Old 04-27-2011, 07:57 PM   #12
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Re: My parents wants to buy a house but put it under my name? GG deal?

Has poker softened your brain that much you can't understand a basic purchase? If you think $1000 per month is acceptable for your $100k investment, then why not, go for it and buy the property as an investment. Or not, there will be many who proclaim its a bad deal.................read the spex x thread and make your own decision.

But this garbage about your parents, and 3+ properties, and then not in their name, then they have the cash, but are illiquid................shows a less than basic understanding of real life.
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Old 04-27-2011, 07:59 PM   #13
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Re: My parents wants to buy a house but put it under my name? GG deal?

So to get into more detail... it is a 75 year lease house. 3 bedroom concrete family home. The lease cost 100k. It will be rented for ~1300 a month.

Does this make the deal worst? I figure by the time the lease is up I'm long dead. If my parents would give 50k and I chip in 50k and split the rent. Would this make it a good situation or does the lease completely kills the deal?

I'm sure my parents won't "trick" me into something terrible like that. I know I am assuming 100% of the risk but also I know 100% they have enough asset to pay me back and won't leave me in the dust... All of their houses are completely paid off.
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Old 04-27-2011, 08:02 PM   #14
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Re: My parents wants to buy a house but put it under my name? GG deal?

75 year lease? what the hell is a 75 year lease
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Old 04-27-2011, 08:03 PM   #15
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Re: My parents wants to buy a house but put it under my name? GG deal?

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Has poker softened your brain that much you can't understand a basic purchase? If you think $1000 per month is acceptable for your $100k investment, then why not, go for it and buy the property as an investment. Or not, there will be many who proclaim its a bad deal.................read the spex x thread and make your own decision.

But this garbage about your parents, and 3+ properties, and then not in their name, then they have the cash, but are illiquid................shows a less than basic understanding of real life.
I read spex's thread, my parents are completely unwilling to do a mortgage because they don't want to pay the interest rates. Without the mortgage rate, the house would be alot more profitable.

I really don't want to go into details about their finances, but lets assume they have enough cash.
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Old 04-27-2011, 08:12 PM   #16
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Re: My parents wants to buy a house but put it under my name? GG deal?

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75 year lease? what the hell is a 75 year lease
A long-term Lease contract? It's usually used for commercial properties.
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Old 04-27-2011, 08:25 PM   #17
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Re: My parents wants to buy a house but put it under my name? GG deal?

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Originally Posted by zmyworldz View Post
I read spex's thread, my parents are completely unwilling to do a mortgage because they don't want to pay the interest rates. Without the mortgage rate, the house would be alot more profitable.

I really don't want to go into details about their finances, but lets assume they have enough cash.
To the last, then they want to hide assets, if the need is only your name. That has illegal written all over it. If they want you to put up some cash, then you become a partner. Still the legal issues.

I understand long term leased land, I take it they/you would hold title to the structure, not the underlying land. That in itself is not a deal breaker, regardless of some of the views here.
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Old 04-27-2011, 08:32 PM   #18
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Re: My parents wants to buy a house but put it under my name? GG deal?

So I assume its better to just have them mortgage. If I they don't mortgage and do want to become partners, then how bad would the legal consequences be?
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Old 04-27-2011, 08:36 PM   #19
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Re: My parents wants to buy a house but put it under my name? GG deal?

basically, the legal consequences would never be the same
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Old 04-27-2011, 08:37 PM   #20
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Re: My parents wants to buy a house but put it under my name? GG deal?

Not goot, not goot
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Old 04-27-2011, 08:38 PM   #21
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Re: My parents wants to buy a house but put it under my name? GG deal?

The big questions is, why do they want to avoid their name on the title. Most mob run businesses are titled to a stooge, then if/when the **** hits the fan, that person goes to court while the mob gets away clean. With the cash.

If you are on title, then all responsibilities and the cash should go to you. Why be on title if the cash doesn't flow to you?
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Old 04-27-2011, 09:20 PM   #22
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Re: My parents wants to buy a house but put it under my name? GG deal?

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Originally Posted by cres View Post
The big questions is, why do they want to avoid their name on the title. Most mob run businesses are titled to a stooge, then if/when the **** hits the fan, that person goes to court while the mob gets away clean. With the cash.

If you are on title, then all responsibilities and the cash should go to you. Why be on title if the cash doesn't flow to you?
agreed. If you think its a good deal, buy it for yourself and thank them for the opportunity, and ask them what their finders fee is.

If you think it sucks, say no thanks.
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Old 04-27-2011, 09:30 PM   #23
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Re: My parents wants to buy a house but put it under my name? GG deal?

Thank you all for your valuable advice. I will talk to them about the deal today.

Last edited by zmyworldz; 04-27-2011 at 09:38 PM.
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Old 04-28-2011, 03:18 AM   #24
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Re: My parents wants to buy a house but put it under my name? GG deal?

Why do your parents want to hide an asset in your name? Why don't they just set up an LLC or something?


edited to add: I'd never let anyone hide something in my name....no thank you.
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Old 04-28-2011, 03:41 AM   #25
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OP, I will go with your assumptions that your parents need help and you would like to return the favor of helping them out from feeding you all those years. So let's take the investment perspective for them and assume your money is their money and vice versa. Instead of an outright buy, and taking a lease on this property it becomes a lot more complicated. There better be a damn good rate of return (IRR) for you to take this risk in just having temporary ownership in a certain period of years. With doing a lease, your assets lie within what return you get, and not the value of the property. I wouldn't see any benefit in doing this unless your IRR is 14% or higher in that 75 year period. Even then, you have to account for inflation, how much you can leverage, etc. These type of transactions are more common with commercial where the returns are potentially higher. It's really tough to analize that long term risk from the little information you've provided...1000 a month? Is that guaranteed? For how long? When can you escalate it? What about the money to sink in for improvements during that 75 years? What's the termination clause? And so on.

I did some minor calculations to get you the right return for the risk. You are going to need to escalate the rent about 3% annual for the next thirty years to have a viable stock here. This is taking into account about 20k cost over the inital 100k. But if this runs out at year 15, it will still be a healthy investment.

Last edited by Redtuber; 04-28-2011 at 04:11 AM.
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