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This is an odd one, but I figure you guys might be interested.
My sister got divorced, but wants to stay in her house that they bought a few years ago. It needs work.
Instead of just selling the house and moving on (a much simpler solution!), she is trying to stay.
She can maybe barely afford to pay the mortgage, but would have to buy out her ex’s share in cash so she is trying to borrow money from relatives…basically it’s a mess. It’s a stretch for her to afford it.
I didn’t want to get involved, but the house is in a good suburb of Cleveland, actually a good place for renting houses.
Why don’t I just buy the house? This is relatively straightforward financially, the house will cost like $250k or so. I don’t think this will be some significantly profitable investment, but looks like rent should just about cover monthly costs right off the bat with a 20% down.
This is much more sane from a family standpoint than having her “borrow” all this money from relatives that they probably won’t be getting back.
Of course she would like to gain some equity in the place, and I’m open to that. What’s a good structure to share equity in a house with some conditions on how much of her rent she pays over the years?
What if you buy it, hand over the equity to split with her ex, and then regular rent with no strings attached. You can reconsider the arrangement if she puts in time/materials/work on making the home improvements, but otherwise it's probably best to start with a pretty standard owner/renter arrangement.
Personally, I wouldn’t do it. There are too many things that can go wrong. Divorce sucks. And, one of the things that sucks about it is that you typically can’t afford to have the life you had when you were married (unless you are Mackenzie Bezos).
What happens when and if your sister wants to tap into the equity of the house? Who is going to be responsible to renovate when things needs to be renovated? And who makes the decision that a new bathroom, kitchen, flooring is even needed? What happens if your sister stops paying rent?
What if you buy it, hand over the equity to split with her ex, and then regular rent with no strings attached. You can reconsider the arrangement if she puts in time/materials/work on making the home improvements, but otherwise it's probably best to start with a pretty standard owner/renter arrangement.
This is fine with me and you're right probably makes the most sense to start with. As it would just be as if I bought a different house and rented it out (which I was thinking of doing anyway).
The renovations / wanting some equity are where it gets tricky. I'm totally for sharing the equity with her as I'm trying to help her financially. I'm okay with making just a little on this, but don't want to lose money.
Her buying the house with family loans is just a recipe for disaster for everyone.
Let them sell it. and split the proceeds as their decree states.
If she cared about her "wasband" at all, the house will remind her of him, everyday. If she doesn't care about her wasband, then she's STILL not going to want to stay in there. It'll remind her of their relationship.
So, the short of it is...she's gonna move out either way...
This is an odd one, but I figure you guys might be interested.
My sister got divorced, but wants to stay in her house that they bought a few years ago. It needs work.
Instead of just selling the house and moving on (a much simpler solution!), she is trying to stay.
She can maybe barely afford to pay the mortgage, but would have to buy out her ex’s share in cash so she is trying to borrow money from relatives…basically it’s a mess. It’s a stretch for her to afford it.
I didn’t want to get involved, but the house is in a good suburb of Cleveland, actually a good place for renting houses.
Why don’t I just buy the house? This is relatively straightforward financially, the house will cost like $250k or so. I don’t think this will be some significantly profitable investment, but looks like rent should just about cover monthly costs right off the bat with a 20% down.
This is much more sane from a family standpoint than having her “borrow” all this money from relatives that they probably won’t be getting back.
Of course she would like to gain some equity in the place, and I’m open to that. What’s a good structure to share equity in a house with some conditions on how much of her rent she pays over the years?
Or is the ideally totally stupid?
IMO, this sounds like a terrible idea. Follow your gut and don’t get involved.
Bottom line is that she cannot afford the house on just her income.
This situation reminds of the old saying, "Never lend money to friends or family". Too many things could happen to make that relationship bad or even worse that it might be now.
OP, don't get involved as you will likely regret it.
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