I am a retired U.S. Marine and am currently in an executive position in a publicly traded sales firm.

I am very fortunate in that when I retired from the Marines I joined a great company that has really taken care of me. I am well paid and when the firm does well, I receive large bonuses.

I want to invest in real estate in the San Dimas, California area. I want to buy a home and rent it to a family member who lives there. He is entirely trustworthy and is also a skilled carpenter, plumber and overall "Mr. Fixit". He would definitely take good care of the home and would be able to handle most repairs, etc.

I do know that the homes in the area have a history of steady appreciation. My plan is to buy this home and hold onto it for at least 5-7 years, maybe longer, before selling it.

I have superb credit and can come up with a lot of cash, but I know there are many alternative ways to buy a property and I'd like your advice on some of them.

I can pay cash for this home, but I do not want to tie up this much money in it.

Also, my relative does not earn a high income and he won't be able to pay rent equal to or greater than the mortgage payment. I am willing to accept a negative cash flow situation in exchange for the long term payoff.

Are there ways I can do both - get the property without putting a lot of money down and obtaining financing that results in a low monthly payment my relative would be able to meet?

I am very interested in hearing the advice of experienced investors.

Thanks in advance!

While all situations differ... being the landlord for a relatives isn't a great way to become involved in investments... having financial dealing with relatives is a generally poor or at least less desirable way of running a business... because it is a business and not a family matter.


Do what you wish with the relative but don't confuse it with investing as a business activity. They almost never work out that way.... kinda like getting married... everyone thinks it will then....

Check with some local mortgage brokers and ask about investor loans.

You should be able to get a minimum of a 90% loan on the property (you put 10% down) or 95-100% depending on the property price and your financial situation.


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Jim Lee, CRS, ABR, GRI, e-PRO
Realty Executives Associates
Knoxville, Tennessee
http://www.KnoxvilleMLS.com
Jim@KnoxvilleMLS.com
1999 REALTOR of the year, Knoxville Association of REALTORS

I am not an attorney, I am not your attorney, and I am not giving you any legal advice. This response is only given for informational purposes and should not be construed or substituted for legal advice.

Thanks for the responses.

Allow me to clarify a few things.

My relative in California is in need of assistance. He is attending college full time and I want to help him and his family by providing them with a nice home at little or no cost. They are great folks and will take good care of the property. I trust them completely.

I have the financial resources to absorb the entire monthly mortgage payment and will do so if necessary.

My thought is that while I provide assistance to this family, the house will definitely appreciate in value like any good investment. If I can get the house for little or nothing down, I'd like to do so.

I am obviously banking on the assumption that the house will appreciate in value over the long term. I plan on holding the house for at least 5 years prior to selling it.

As such, I am very interested in getting into the house as cheaply as possible, and having my monthly cash outlay as little as possible.

I am interested in hearing any additional insights anyone may have regarding this situation.

Thanks!

I would say what you inted to do is a good idea if you can put a nice plan how to acctually renovate the entire house for the next 5 years using the experience of this "fix all" relative.

Thnik about all the improvements that would turn the house into more attractive place to live and that will eventually pay off after 5 -7 years.

But remember write down all these things that he is going to renovate/improve and come up with a budget for the required materials and time, then compare it to the price you could eventually get for the house.

I had such an experience couple of years ago with an appartment and I was able to acctually sell it at 30% profit after I did the renovations.

What I learned is that it is very important to do a cost estimation of how much you are going to spend for renovations/improvements and also to change only what is acctually adding a value to the property. Do not perform renovations that are turning the property in to luxurious place, because it will limit your chances to sell the property.

Why not invest in Florida. It has the same appreciation rates at a fraction of the initial investment. I work with many Cali investors that want to buy RE in "the next California. Drop me a line.

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Paul Boynton
RE/MAX Atlantic
Jacksonville, FL
pauljboynton@hotmail.com

Hmmm. Maybe because his relatives do not live in Florida! That just may be the reason for not considering FL in the first place.





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Paul Oaks
Broker\REALTOR
Coldwell Banker

Thanks to those who responded.

While I fully intend to put my relatives in this home, I also am interested in buying another rental property.

Any nuances of California law that I need to be aware of or study? The property I buy would rent in the 1700-2500 range. Single family dwelling.

I'd love to hear your input.

S/F, Mike

Im not experienced enough to give advice, but i would like to say Nice work in planning this out befor making the first/huge step.

In my opinion, the only way you can help your extended family member and at the same time enjoy property appreciation is to pay 50% down and rent it a little over above the mortgage payment to your relative (so as to cover your insurances and taxes).

However, I agree with RealityCheck that you can not be an investor and a philanthropist at the same time. By doing so, you will loose both money and relationship in the end.

Having lived in California from 1992 till 2003, I now live in Florida Panhandle. My wife and I were both work in California and could not afford to buy a decent home. Now, one year in Florida, I own a new brick home home and a rental property with mangable debt. I agree completely with NEflorida that Florida is the one of the best places to invest in real estate. In my opinion, Panhandle and Jacksonville, Ocala are the places I will invest in.

Reed- wrote about a investor who moved to florida from NY just because assumable mortgages were common -and you have homestead. I would not rule out texas and other hot spots.

Where are those online court records??

I'm a Realtor and I have lived in San Diams for the past 10 years. I currently work with a couple of investors as well as residential property clients. I would love to help you with your search. e-mail me with your info And I will let you know what I need to get started searching for you.

I lived in San Dimas for 5 years before I got married. My Mom still lives there. We bought our house is San Dimas for $210K in 1993 and now it's $420K. I would think if you want to help your relative by putting it all cash, you should be able rent the house to him for what the interest the money can make if it were in the bank. The property will appreciate so your money will grow in RE and you can be a good neightbor helping out your relative.