Moving to a new house ( PLease read)?

Question

OK. Im 18 yrs old and my dad is a pretty wealthy Guy. Ever since i was ten he's been telling me he's going to give me his 4 family house when im ready. And we talked about it last night and he's gunna talk to his Lawyer to get the title put into My Name and My Fiance's name. We will be living in the 2nd floor and renting out the other 3 units. But we have to remodel it first because it's an old house and it needs a lil work.We will both be working and i will be going to school full time in January. We will be collecting rent from the tenants and that will help pay for the mortgage (there's $100,000 left). And we also have to pay for utilities but is there anything else that we may have to pay for? like taxes? I know that we should always keep extra money just incase something happens and i know that its a big responsibility and i dont want to jump into it and then find out that i have like 50 other things to pay for. Any Tips for a New Landlord?
Thanks in Advance.

Answer 1

First off, I recommend that your generous father put this property in YOUR name only, excluding your fiance at this time. There's plenty of time to add the fiance once he becomes your husband.

That being said, you're biting off a big responsibility here, and I wonder if you have the time available to do everything you are planning. You're going to be working AND going to school full time, PLUS you plan to remodel ? That's a pretty heavy time commitment.

As far as expenses go, consider that you will have to pay the property taxes, insure the place, and maintain it to be properly habitable and rent worthy to tenants. You don't mention utilities, so check to see if they are landlord paid or if each tenant pays his/her own. Also consider that you may have vacancies from time to time and may not collect the full rents for any given month.

MaryB also has a valid point regarding the mortgage. You MAY be able to get around that with Dad selling you the place on a land contract, with the land contract payments to Dad being the same amount as his monthly mortgage payment. Check with a CPA or real estate attorney to see if this would qualify as "an arm's length agreement" or not.

Answer 2

what ace said.

While it appears that your dad is giving you a nice gift, I'm reading between the lines and feel he may be trying to get rid of a problem.

Why would your father put the deed in you name, but still be on the hook for the mortgage.

Plus, why isn't he only putting it in your name. I would NEVER put it in your boyfriends name. In fact, if I was giving property to my kids and they are married, I would still put it in my kids name only.

Having owed an apartment building before, there are a lot of extra expenses.

If I were you, I wouldn't take title or responsbilty for the place until I knew more about how to do property management.

Why not do this: go ahead and move into the property and manage it. Learn the business this way. However, you use Dads money. If you like doing this stuff, then get the building.

PLUS, you are 18. what about college, etc.

Answer 3

My first tip is to put something in writing have regarding what happens to the home in the event you and fiancé split. I’m not saying that because of your age (I’d say the same if you were 48), but rather because I’ve been privy to situations where two unmarried people have purchased homes together then split and things get messy because there’s no divorce court to help you sort it out.

Regarding your mortgage, you should find out if your taxes & insurance and are included in your payment or if you must pay those costs separately. You should have money set aside for repairs, and don’t ignore your normal costs of living. If you’re switching from a situation where your parents have been paying for your clothing, medical and personal care needs to covering some or all of those costs yourself, make sure you can really afford all of this or you could be in for a surprise.

Answer 4

If you cannot afford to pay for the mortgage WITHOUT renting out the other 3 units, then you cannot afford to buy the house.

That is asking for trouble.

Also, you get NO tax deductions if the MORTGAGE is not in your name...changing just the title and not buying the house leaves the loan in your father's name and he gets all of the tax benefits of ownerships and you get none.

Doesn't sound like a deal to me. I would walk away from it. He isn't giving you anything but debt.

Answer 5

a few things to consider:
-annual property taxes
-all utilities
-maintenance (what if heating system breaks down or roof leaks)
-what if the tenants don't pay you rent, what if they vandalize and you have to reapair
-insurance

Answer 6

Yes there are property taxes and insurance that you will have to pay.