Hello - I’m looking for some guidance and suggestions for my current situation. I live in a very expensive part of the country - just outside New York City. I have excellent credit and I pay a substantial rent for a 2BR apartment where I live now - $2,000 per month. My income is ok, but not enough to stockpile money for the kind of down payment I need in this area. I have a family member that has a lot of capital.
I’ve thought about the following idea, please give feedback if possible. I want to get out of renting and into ownership. Real Estate prices where I live are unbearable. I can purchase a 2 family brownstone in the $975,000 range. I’ve thought about a way to get my family member to invest the down payment such that it makes sense for him.
Idea:
He puts up the $195,000 approx down payment.
I live in Apt. 1 and pay $2,200 a month
I rent out Apt. 2 for same $2,200
My family member covers the approximate $1,800 shortfall on the mortgage per month.
My idea is that we’d form an investment company, whereby the equity owned in the property would be based on the capital invested over time. I would give my fam member credit for all the rent received for Apt #2. So as time went on, the percentage of ownership would change based on monies in. The advantage I see for my family member is straight up investment with little money to pay each month, with equity build up over time. My assumption is that the calculation of ownership can also be applied to depreciation and interest deductions.
Can someone give me their thoughts on this and any other ideas or suggestions. I would be very grateful.
Thank you.
S