How To Get Rich Buying Real Estate From Your Parents With No Startup Money And No Credit
You can enrich yourself from real estate equity appreciation by purchasing a property from your parents using traditional or creative financing that may or may not require a down payment or credit. Whether you’re a first-time home buyer or a seasoned investor, you can buy any type of property from your parents, from a house you live in with them to an investment property that you rent to tenants. Here are some of the reasons why it can be faster, easier, and more financially profitable for you to buy from your parents than from anyone else.
You don’t have to buy an entire property
When you buy from your parents, you can buy any percentage you want, such as 10%, 50%, or 75%. If you pay less than the total price, you will have lower mortgage payments and buying a home is more affordable. Regardless of the percentage you own, you still get the benefits of home ownership, such as capital appreciation, mortgage interest deductions, property tax deductions, and capital gains tax exclusions.
You can share the responsibility with your parents
When you buy a partial interest in a property, you and your parents share the responsibility for owning it, including any mortgages you each have, property taxes, homeowners insurance, or homeowners association fees and maintenance. Because you have more than one person responsible for a property, you can rely on others for financial strength in the event of difficulties.
You can raise your status from tenant to owner
Do you already live at home without paying rent or do you pay rent? So why not buy your parents’ house, since you already live there, and get an equity stake in their property? So, you no longer live with your parents, but you live in the house that you have with your parents. If your parents have more than one property, you can buy one of their secondary or investment properties and live on your own.
You don’t need to get a loan from a bank
When you buy from your parents, you don’t have to qualify for a loan from a traditional lender like a bank that has income, asset and credit requirements because your parents can act like a bank and give you seller financing for your purchases.
You can create your own home loan
When your parents act as a bank, you can obtain favorable loan terms by structuring your own repayment schedule with a manageable loan amount, a lower-than-market interest rate, and a repayment term of your choice.
You don’t need a down payment
Unlike getting financing from a bank that has down payment requirements, you can buy from your parents without any down payment.
You can get property tax benefits
Depending on the state you live in, your property taxes may not be reassessed to current values when you buy from your parents or grandparents due to a parent-child and grandparent property tax reevaluation exclusion grandchildren. This is a great benefit when parents and grandparents have owned the property for many years and have property taxes based on the value of their property at the time they purchased it.
You can receive gifts from your parents
Your parents can give you cash or gifts of equity for your purchases, reduce the principal amounts of any loans you owe them, and allow you to shop at a discount. Anyone can give away a limited amount of money in a given year to any number of people they want without having to inform the Internal Revenue Service. This is a way that your parents can sell you without having to pay the entire debt you owe them. They can also credit you money at the close of the escrow for your closing costs by deducting the credit from sales income.
You can turn your financial supplements into an investment
If you are financially supplementing your parents because they do not have enough to live on during retirement or for any other reason, you can turn your supplements into an investment by buying your parents’ house and paying them the mortgage. As a result, you will have an equity stake and the benefits of home ownership.
You can make a profit if you are a real estate agent buying from your parents
If you are a real estate agent, you can get cash from your parents at the close of the escrow. If there is enough equity in a property to liquidate the existing bonds and pay you a commission, you can take out a traditional loan to buy an interest in your parents’ property and earn a commission for representing yourself as a buyer, or both you and your parents as buyers and sellers.
You can still get rich when your parents are not an option
If their parents are not an option to buy from them, consider buying from other family members and other vendors. You can buy a partial stake in real estate and use seller financing to make your purchases easier. Also, consider joining forces with siblings, friends, roommates, or other shoppers to increase your purchasing power.
It can be easier to buy from your parents than from strangers
There are a lot of resources in our own families, but many of us overlook this fact because we are trying to achieve financial success on our own. Because your parents have worked their entire lives to achieve what they have, one of the smartest things you can do is work with your parents and build on their success.
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