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Should I buy a investment property with family?

My parents currently own rental properties. Now they have asked us to join in with them in buying the next investment? Im just unsure on how to start this process or if it would be advisable to do it in the first place. How many people can go on a loan? Is there a website out there where I can find reliable information for future reference?
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October 14 2013 - Moreno Valley
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An LLC would be a good option.  
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October 20 2013
Anything that you do needs to be in writing and the best thing to do is to form a business entity like an LLC or a Partnership to buy the property in. In the business setup, you can have as many owners as you like and decide on the percentage on ownership.  This will also help protect your personal assets by having the property in its own business entity and will help organize you when it comes to taxes and write offs.
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October 16 2013
My rule for myself is NO . However it depends on your relationship with your parents and what your thoughts are . There a lot of things you have to think about .
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October 16 2013
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I wouldn't do it.
The quickest way to create conflict with family members is to do business with them.
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October 15 2013
Hi,

When investing along with others, one should be careful to make sure they have compatible goals, clear benchmarks for when to buy and sell, an expectation on when they need to pull their money out, and other such factors, so they avoid issues amongst the investors, especially if they are family members.

All the best,

Arpad

 
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October 15 2013
I will tell you from experience that you should NOT invest in real estate with friends or family.  Just politely say NO.
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October 15 2013
Any partnership in real estate investing can be trying, but with family there is an added dynamic.  My suggestion would be to discuss the rights and responsibilities up front, write them down (probably best with an attorney and form a separate LLC) and make sure that everyone is on board.
Who does the repairs when the tenant leaves?
Are you hiring a property management company?
The cost of repairs/rehab will be split commensurate with the amount of investment from each party or evenly?
The exit strategy that others have mentioned is very important as well.

I have worked with investors that partnered with family members a number of times.  Almost every one has had issues that came up that created stress in their family.  They have always worked themselves out, but not without some animosity.  In almost every case, it was because they didn't listen to advice about putting everything up front, in writing and lost of discussion.

Another thing to keep in mind is:  Will the loan on this investment property hamper my ability to get a new mortgage should I decide to move?

Talk to a mortgage professional and ask about investing in rentals in your own name first so you can get a taste of what it is like to be a landlord (its not for everyone).  Perhaps even use your 401K to purchase a rental (that is another discussion to have with your mortgage person).
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October 14 2013
When an entrepreneur is starting a new business they usually do not have the cash to fund the startup purely by themselves and will therefor need to find investors.  They often think of turning to family and friends for the initial funding, as it is sometimes easier to raise money from them than through other avenues.  Your family thinks you hung the moon and your friends trust you. They know what a genius you are.  And as an added benefit, more than likely your friends and family are not going to try and tell you how to run your business.  But it is because of your love for these relationships that you should think it through and have an honest dialogue about the risks of taking money from your friends and family to fund your startup.
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October 14 2013
efanniemae.com lists the guidelines for investment properties. 
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October 14 2013
It all depends on your relationship with your parents and whether you want to own property later on, or already own property now.  Why don't you talk with a few mortgage brokers and discuss your specific situation.  The best of luck!
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October 14 2013
Investing with people you trust can be a great way to get into Real Estate investment and to have some mentoring along the way.

That being said, always be clear about "the end goal." Lay out what everyone's expectations are, what your "exit strategy" is, and how to handle best & worst case scenarios. Plan who will take care of what, when. The more thorough you are, the less guess work there will be between everyone.

Good luck, and congrats on your first potential investment!
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October 14 2013
I would say there is nothing wrong with entering into a business relationship with family as long as everything is in writing. Documenting how the arrangement will work and everyone agreeing to it in writing can help save the frustration that often comes with entering into a business arrangement with family. There is no "I thought you knew". Everyone will definitively understand the rules of engagement.

Make sure there is a defined exit strategy. What if circumstances change for you or your parents. You could get a great job opportunity and need to move out of state. You want/need money to purchase a new home or to help fund a wedding or child's education. Anything can happen and my experience has always been it often does.

Best of luck!
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October 14 2013
It sounds like a great opportunity to invest with your family but before taking the next step, I would ask your parents why they are looking for you to get involved now.
If its to grow your investment portfolio, then partner on!  If there are other reasons behind it, for example, maybe they have reached there maximum loan capacities and are now looking to utilize your credit.  
It helps to to know where they are coming from before you make the next steps of speaking with a lender & beginning the process.
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October 14 2013
Some people will say not to mix business with pleasure. I say- why not mix the things you love. 
I believe if you have a great relationship with your family members and all share the same values and business views, this could be a great way to work together and turn a profit.
However, there is no amount of $ to be made, that will ever be worth losing a loved relationship over!
I would contact your local/personal lender and ask the question as to how many people they will allow on a note.
Personal contacts will always have a clear answer.
Good Luck!!
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October 14 2013
 
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