Is this a good investment?

Question

I inherited some money a year ago. My sister proposed that I go halves on a house with her. She said that since the houses were expensive, I couln't afford one and she couldn't afford a really "nice" house. She said to put half the down payment($40,000)and pay half of the mortgage until I decided not to live with her anymore. She would cash me out of the "deal" or sell the house to get our cuts. She is married and has four kids 16,15,9,5. And it's me and my 71 year old dad. Would we be able to make it? Is this deal too risky? She said that everything is going to be legal with a notory public. The houses are located in Sacramento,Ca and run about $315,000-450,000 Is this a good investment?or should i put my funds onto a cd at a bank?over a years course,I would have paid $15,600 plus my 40 grand down.we plan to live together for four years that would be a total of $62,400 in payments plus my dwn payment.and the house would only have went up about$130,000over the 4 year period.any advice?

Answer 1

Don't do it. DON"T DO IT!!!

You will lock your money up. Real Estate is not liquid. When you want out of the deal, how do you decide the new value of the home. What happens if your sister can't pay her share of the mortgage payment. What if the market slows down (like it is in Sacramento) and the home values decrease.

There are too many issues like these to go into an investment with family. I recommend investing 75% to 90% of your inheritence. Speak with a financial adviser and come up with a moderate risk plan. You will thank me in 4 years if you don't buy a house with your sister!!!

Answer 2

Ok first of all with 40 K down you just put 10% down on the home of her choice. I would suggest a duplex. There are some good duplex's in the sacramento region in which you can live on one side and your sister can live on the other. 3/2 2 car garage one one side and 3/2 car garage on the other. So if you decide to leave and move on your sister and you can rent out the other side. If your sister cannot afford the house payment with you than you can kick her out and rent out the other side. California Real Estate is always a good investment especially homeownership because you own the home and land. Before you go into buisness with your sister I would suggest you both get prequalified together. This way you both can see what your fico scores are and each other's finances. This can raise a major flag if your sister is good with her money or not. Also how equity raise in a home is up to the current market. Two years ago home were going up fast. I made over 100k in my home in one year. So when you say the house will go up 130k its a guestimate but a worst case scenario. Homes are to rise in 2008 but Sacramento is still building new homes and adding new companies which brings in new homeowners. Bottom line: First get prequalified together and than decide on the property. A good REALTOR can help you decide which areas will keep its equity and which areas are not good investments. CD's flucuate with the market daily as well as interest rates. Equity in home does not flucate daily it stays as longs as the value of the home around the property can sustain its value. Buy a home you have enough money to do it especially in Northern California.

Answer 3

First of all, don't put down a down payment on a home. You can do so much more with the money. If you decide to go with it, just know that 100% financing is still VERY available.

There are also investments that can give returns, guaranteed, in real estate with much higher rates, without the risk. My history is the mortgage and real estate investments. From flipping houses to rentals. . .you name it. I would be more than willing to go over this transaction with you and let you know your options and what to look out for.

Oh, and No CD's my friend, they are not anything but a joke. You give the money to the bank for 3 % and they are able to borrow from the fed many many times the amount and lend it out at 10-25%. Only they win with CD's.

Answer 4

a house is a good investment, as long as you are comfortable with the living arangements. I am only concerned with her family because will she have the money to cash you out when you decide to move. I think with 40,000 you might be able to get your own place, many cities offer down payment assistance programs, they go by your income not your savings, it is worth checking into. Good Luck.....

Answer 5

Houses are generally always a good investment. BUT put EVERYTHING in writing. Don't forget to be VERY specific about dates,ie, from when to when you live in the house, how long after you move out she has to "cash you out" with the option she has to move out of the house if she does not meet the deadline for "cashing you out" and the house will be sold and profits split evenly. In business transactions with relatives keep it strictly on a business level.

Answer 6

ok so heres the thing it is family BUT four years and THAT MUCH MONEY. do u realize that if you were to open say a 10,000 cd at 5.25% that is more than 5,000 in intrest a year? i would say investing your money would be WAY better than the alternitive. trust me if you have that much money to look into moving around you want to do something that will secure you and your father. check out www.moneymangement.org or www.chase.com for investment options and intrest rates, maybe then you will feel more comfortable making that decision after all it is up to you.

Answer 7

The investment looks good. Business deals with relative are famous for falling apart and being very messy. Go forward with caution. Get a lawyer and a complete agreement. You might be best to go smaller on your own. Good Luck.

Answer 8

I suggest to buy investment properties and resell it to others double the price. if you need help about the properties, pls kindly email me. ;)