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Old 10-24-2010, 07:46 PM   #1
Barrin6
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Unhappy Parents want to buy a house and put it under my name

Background: My parents have had experience buying a house and renting it to tenants. They have one that is located in Ontario, CA for over 10 years. I think it's been fine. Recently, my mum has bought 2 houses in Santa Ana in the past 3 months, fixed them up and started renting them out. I don't really approve of my parents taking out loans from the bank and buying up houses, since I'm not really confident on whether they are making +EV decisions. Nonetheless, it's their money and none of my business. I did already voice my concerns but that's it.

Now my parents wants to buy a 3rd house in Santa Ana that they found. They went and asked me if I would be willing to invest it with them ie put down 20k for the downpayment. I said no, since I had no idea what house or if it would be profitable to do so and also I'm broke. Now they want to buy the house anyways with my dad as a cosigner in order for me to save money on taxes? My mom already has 3 houses under her name, one from ontario and 2 from santa ana.

I don't mind helping them out, but I feel like if I do put this under my name, it screws me over for the future when I do want to buy my first house? Also this year, I'm not even going to make alot of money for the 2010 since I'm in between college graduation and job searching. And poker is only holding me over for that duration.

I just don't feel comfortable doing this but my parents keep on insisting I do it because it will help them with interest rates? And also tax deductions?

Any advice would be helpful, thanks. I just don't want to get dragged into a hole when ***** hits the fan because of my parents careless mistakes

Btw Santa Ana is in California for those who don't know.

Last edited by Barrin6; 10-24-2010 at 07:56 PM.
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Old 10-24-2010, 08:20 PM   #2
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Re: Parents want to buy a house and put it under my name

Run. If they screw up, it's on you.
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Old 10-24-2010, 08:45 PM   #3
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Re: Parents want to buy a house and put it under my name

Definitely do not do this.
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Old 10-24-2010, 08:57 PM   #4
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Re: Parents want to buy a house and put it under my name

sounds like a

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Old 10-24-2010, 09:51 PM   #5
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Re: Parents want to buy a house and put it under my name

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sounds like a

Lol
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Old 10-24-2010, 11:12 PM   #6
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Re: Parents want to buy a house and put it under my name

stipulate that they have to use jalexand as escrow
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Old 10-24-2010, 11:15 PM   #7
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Re: Parents want to buy a house and put it under my name

Actually hold on a second....

Aren't your parents slaves and still owned by CTS? If so, obviously CTS can backstop this deal and you should proceed. Maybe you can use the profits to buy their freedom!
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Old 10-24-2010, 11:24 PM   #8
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Re: Parents want to buy a house and put it under my name

Why would they choose Santa Ana? The gang/violent crime problem is getting really bad--reading the news it seems like someone is killed there every day. OC locals call it Stabba Ana.
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Old 10-24-2010, 11:25 PM   #9
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Re: Parents want to buy a house and put it under my name

barrin i think you should ask them how quickly they can leverage this house into a few more. so if the most your mom could get was 3 mortgages leveraged under her name, then you can get 3, and your dad can get 3, and all of a sudden you guys got 9 houses for just a few down payments. this plan has like 0 downside risks. plus, if you have a brother or sister turning 18 soon then pretty sure you can reach 12 houses!
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Old 10-24-2010, 11:29 PM   #10
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Re: Parents want to buy a house and put it under my name

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Why would they choose Santa Ana? The gang/violent crime problem is getting really bad--reading the news it seems like someone is killed there every day. OC locals call it Stabba Ana.
This is a n00b question, but I'll answer it....

Investing in Cali real estate is a slam dunk way to get wealthy. Everyone knows you want to get your hands on as much as possible, because population is booming and real estate is a limited commodity. It has nowhere to go but up.

Seems like a pretty solid risk/reward potential to assume that the crime problem will get cleaned up as cities continue to put more cops on the street.
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Old 10-24-2010, 11:32 PM   #11
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Re: Parents want to buy a house and put it under my name

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Originally Posted by jalexand42 View Post
This is a n00b question, but I'll answer it....

Investing in Cali real estate is a slam dunk way to get wealthy. Everyone knows you want to get your hands on as much as possible, because population is booming and real estate is a limited commodity. It has nowhere to go but up.

Seems like a pretty solid risk/reward potential to assume that the crime problem will get cleaned up as cities continue to put more cops on the street.
also, when california legalizes drugs, it makes sense that real estate in areas full of drug crimes will skyrocket. to get rich you need to be ahead of the curve and buy when everyone is leaving the area. if anything them buying a house in a really poor neighborhood makes it an even better idea
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Old 10-25-2010, 02:25 AM   #12
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Re: Parents want to buy a house and put it under my name

Thanks guys,
I'll make sure to get my name on the title and many more houses too.

I appreciate the advice
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Old 10-25-2010, 09:29 AM   #13
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Re: Parents want to buy a house and put it under my name

what the hell is going on in here? level I guess?
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Old 10-25-2010, 09:53 AM   #14
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Re: Parents want to buy a house and put it under my name

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what the hell is going on in here? level I guess?
Barrin is just trying to build a bridge to baller island.
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Old 10-28-2010, 02:59 PM   #15
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Re: Parents want to buy a house and put it under my name

i live 15 mins from santa ana it's not the best place to live. lot of illegal immigrants/ gangs/ etc

Location wise i don't think its +ev
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Old 10-28-2010, 03:01 PM   #16
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Re: Parents want to buy a house and put it under my name

Quote:
Originally Posted by jalexand42 View Post
This is a n00b question, but I'll answer it....

Investing in Cali real estate is a slam dunk way to get wealthy. Everyone knows you want to get your hands on as much as possible, because population is booming and real estate is a limited commodity. It has nowhere to go but up.

Seems like a pretty solid risk/reward potential to assume that the crime problem will get cleaned up as cities continue to put more cops on the street.
as for the cops on the street. I was looking to become a police officer a while ago... I did consider Santa Ana police department. They told me they were short like 50 something people but they cannot hire because they don't have the budget etc. etc.
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Old 10-29-2010, 01:05 AM   #17
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Re: Parents want to buy a house and put it under my name

First, don't do it if you're not 100% comfortable doing it. Second, you're (probably) right about you getting screwed when buying your first house. It varies state to state, but many states have programs for great interest rates (and probably other benefits) for first time home buyers that fall below a certain income (although this # is pretty high and many fall under it). There will always be plenty of +EV home decisions, so if they're serious about investing, they should have money socked away for when the right deal comes along. This is obviously easier said then done, but there's no reason for you to get involved unless you want a piece of the action. On top of everything else, mixing financial stuff and family is a recipe for disaster and should be avoided in almost every situation IMO.
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Old 10-29-2010, 12:57 PM   #18
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Re: Parents want to buy a house and put it under my name

Ask your parent's how much you would save on your taxes. Chances are they have absolutely no idea.

If they can't get the deal on their own they probably shouldn't be doing it, as they already have multiple properties.

Run away from this "deal" and do not cave in. Unless you do your own homework and decide it is something you want to be part of.

Last edited by Shoe; 10-29-2010 at 01:03 PM.
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Old 10-29-2010, 01:11 PM   #19
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Re: Parents want to buy a house and put it under my name

seems to me like the reason they want to work with you is that:

1. they will get a better interest rate
2. they may need your money

without knowing more, i would run far away from this "deal." if it were me, i'd probably try to dig deeper and see if i could figure out if my parents had gotten themselves into some sort of financial mess, but that's really on you to figure out if you want the responsibility that goes along with that.

it's possible the other homes are going great and they just want to keep doing the same types of deals but get a better interest rate. seems unlikely as they would probably find it easy to get more capital if this were the case, but who knows.
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Old 10-29-2010, 06:45 PM   #20
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Re: Parents want to buy a house and put it under my name

Any real estate investor that has "trouble" coming up with $20K is a joke.

Doing this deal would be as stupid as buying some random stock that you got a "tip" from in the mail because it was going to make 2160% in ONLY TWO MONTHS!
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Old 10-29-2010, 09:14 PM   #21
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Re: Parents want to buy a house and put it under my name

Barrin6 is all growns up
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Old 11-04-2010, 05:55 PM   #22
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Re: Parents want to buy a house and put it under my name

If you're not interested, tell them you are not interested. If you don't want to just blow them off for your relationship, sit down and get all of the numbers from them and see if it is a good business decision. If you run the numbers and it looks like -EV, explain this to them and it will be a reason for you not to invest.

It's tough saying no to friends and family but when it comes to business, you need to be professional about it.
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Old 01-06-2011, 11:16 AM   #23
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Re: Parents want to buy a house and put it under my name

I also think you should be suspicious op.
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Old 01-06-2011, 12:19 PM   #24
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Re: Parents want to buy a house and put it under my name

My advice is: get the hell out.

Are you still living with them? Consider moving alone to a cheap place. Also consider dropping college or putting it on pause if you can't afford it. IMO, you can learn a lot more as an autodidact, and most jobs where your employers care more about a degree than about actual knowledge and ability are probably going to pay little and have bad atmospheres. Not to mention you don't need any degrees to start your own business.

Whatever you do, don't buy a house. Unless you're crazy sick at identifying +EV situations, you're gonna get screwed as the value of real estate continues to drop. Inflation won't help you either, unless you have a fixed rate mortgage and inflation % is much much higher than that rate.

There's a huge over-supply of real estate in the US. Prices are still being kept up by The State / FED guaranteeing all the mortgages, which allows for the banks making risky loans that will eventually fail and flood the market with more houses. For the moment, this keeps up demand for buying houses, But houses aren't like other products. You can't just export what the local market doesn't want. Someone has to want to live in that house. If you buy it with the intention of renting it, but you need to charge too little rent in comparison to the value of the property in order to get any tenants, you're going to want to sell. But so will everybody else. And so you'll have no one to sell it to.

In order for supply to meet demand, prices need to come down significantly, and whether they do so nominally or just in comparison to other goods (because of inflation), you're still losing money.

Last edited by soon2bepro; 01-06-2011 at 12:31 PM.
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Old 01-06-2011, 02:08 PM   #25
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Re: Parents want to buy a house and put it under my name

WTF is this
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