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Creating a family "Partnership" to acquire Duplex


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Hi,

I am just beginning to learn about mortgages and I have a scenario and some questions for someone knowledgeable:

Duplex for sale. My father and two siblings currently live in one half of it.

My father's credit is pretty good, I think his avg score is 720. -nothing below 700. My credit still has two c/o's and three collections to remove - nothing above 580. My siblings' credit is worse than mine. Duplex is worth 240-250k, my fahter knows the owner well and has been appoached to purchase property several times. He can't do 250k because he's retired and his income to debt won't allow. I propose creating a corporation between the four of us (my dad's friend says a partnership is better) and the four of us split the down payment and the equity :) while bypassing the bad credit among us and using dad as the primary buyer in the partnership. Is any of this feasible or realistic?

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Between the 4 of you you should find a lender to give you the money. I do not think it will fly for a bank to have 4 owners but 1 mortgagor. You try to offset your credit score with the building's cash flow. Try a mortgage broker or small local bank. The owner might be willing/able to take back a mortgage with the 4 four of you, with graduated payments.

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A rule of thumb is that the rent should be about 1% of the value of the property. Different areas have different figures, but that is a long time general guideline.

Take 75% of the 1250 per month, and that is over 900 that you can use for additional income. Maybe that will work.

He could also qualify for a "alt-A' lender program where there is no income verified/No employment verified.

Charles

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What would your father's ratios be? DU will often give an approval with ratios pushing 65% if everything else is tight, and the rental income that firstsource mentioned does not usually need to be verified with any more than the appraiser's opionion of market rent value.

If the down payment is coming from other family members you could deposit it in your father's name and let the money season a couple months since this is a private sale and it appears the seller might be willing to wait, or you could put your father on an existing account and provide a letter that the money is his to use at his discretion. The lender could order a VOD to show seasoning and it would not show how long your father has been on the account.

As firstsource mentioned, if your father went Alt-A he would probably have to go no-doc because of his fixed income status but his credit scores might still possibly get a better rate than if the loan had to go subprime with everyone else on the it, and if you all can put 20% down a no-doc should be a slam dunk and no verification of anything needed. There are several investors who have no problem with putting people on the title that are not on the loan.

If you all are putting less than 20% down and the credit issues are not from current derogatories, FHA might be something to take a look at also.

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