Buying a Multifamily House
My husband and I are considering buying a multifamily house with another couple (two family). I am just wondering if anyone has any advice before we even start. Do we have to have the legal side drawn up BEFORE we apply for the mortgage, or is it possible for each couple to get a mortgage…
My husband and I are considering buying a multifamily house with another couple (two family). I am just wondering if anyone has any advice before we even start. Do we have to have the legal side drawn up BEFORE we apply for the mortgage, or is it possible for each couple to get a mortgage without that part done. Also what sort of downpayments are needed for a house as opposed to a coop?
See past posts on TIC in this site. I’ve been trying to do this (sell 1/2 my house) for a while, and not sure if I will succeed. Know anyone in the market for a duplex in PS?
TIC is easier than going LLC, but there’s only a combined mortgage.
Right – I was making the distinction because dibs was suggesting an LLC & I don’t think that makes sense for you. Go with the advice from Adam (a mortgage broker) & look in to TIC. Just be aware of the complications, like what happens when one couple wants to or has to sell, and spell that out in your agreement. And with one mortgage, one couple can’t refinance their half of the loan; and if one couple moves & sells to new TIC members, you have to refinance, even the couple that’s staying has better terms on the existing loan than the new market rates. No worries if everyone lives happily ever after in the same 2 family home.
just to clarify the goal would be for both couples to use it as their primary residence, not to use it for any investment. Thanks
Purchase it with 1 mortgage and hold title as TIC (tenants in common) Best way to obtain the most attractive mortgage.
You should be pre-qualified before you start bidding on houses. Once you are pre-qualified obtain a lawyer for when you see a property that you would like to buy.
Look up tenancy in common. For a multifamily purchase as an investment an LLC would be a common form of ownership. If it’s for a primary residence for both TIC is an option. Unrelated people can own property and get a mortgage, not sure that it would have an effect on the rate, if income and credit of all parties are good enough.
Ask a lender or a mortgage broker – you may not need to have a TIC agreement drawn up before applying for a loan, but you’ll want to spell out many things before you buy, to avoid trouble later when one party wants to sell, in case of a divorce, etc. etc.
I suspect they are “hot” to buy a multifamily house in this environment as prices have come down.
You need to consult a lawyer on the various ways the house can be held. A LLC is the most common method. It will have an effect on the mortgage rate you are able to obtain. The two of you will not be able to obtain separate mortgages on the property.
and that should be How to buy a multifamily house? .. 🙂