How do one handle buying property jointly before getting marrried?
July 5, 2012 12:12 PM Subscribe
How do one handle buying property jointly before getting marrried? (One partner has assets and the other one has income)
posted by anonymous to Work & Money (12 answers total) 1 user marked this as a favorite
So I'm thinking of buying an investment property right now, but my situation is a bit different from the typical buying property with your partner pre-marriage. I don't know anyone who's in a similar situation as me right now and would like some inputs from MeFites.
The BACKGROUND: I'm not officially engaged to my boyfriend yet, but we've discussed marriage and are planning to get married sometime next summer. I know my boyfriend is working on a surprise engagement sometime in the next couple of months. Right now I came upon a great investment opportunity. It's a condo in a desirable location (high income neighborhood with shortage of affordable rentals and exorbitant housing prices) with a tenant already in place. I've worked with the agent who's handling the sale before, and I'm confident that a new tenant can be found quickly even if the current tenant leaves. I know what's the general rent is for a comparable condo in the neighborhood and return of rent vs. condo price is very favorable. I own a house that's completely paid off and worth about $300K, the condo is listed at $130K. Assuming the condo is in ok shape, it's hard to pass up on such a great opportunity.
The PROBLEM: I'm trying to start my own business right now. The business is new, so right now I do not have verifiable income. I have a HELOC on the paid-off house worth $50K, but I can't get an increase on the HELOC line due to income issue. My boyfriend has a good paying job and is willing to co-sign the loan, but doesn't have enough savings to put down a downpayment on his own. If my boyfriend co-signs the loan, there's a good chance I'll be approved for an increase in my HELOC line that'll be enough to pay for the condo. The rent should be more than enough to cover the HELOC payments.
Bottom Line: Neither of us can get the property on our own, but together we have a good solid chance to get this property.
The COMPLICATION: I plan to put the paid-off house on the market in Jan/Feb of next year. Due to complicated family reasons that I won't go into detail here, I have to sell the house. Assuming I can sell the house within a reasonable timeframe, I'll use the proceeds from selling the house to pay off the rest of the HELOC loan.
My boyfriend and I live in a community law state. If my boyfriend co-signs the HELOC loan, that means I have to put him on the title for the condo, however, if I use proceeds from selling my pre-marital property to pay off the rest of the loan on a joint property, how do I ensure fairness and equity in the worst case scenario? Should I ask that all rent proceeds go to my account once I paid off the HELOC by selling the house if that happens before we officially get married? And after we get married, then we switch to have the rent proceeds go to a joint account?
Has any MeFites ever been in a similar situation or know someone who did? I don't want to pass on this opportunity, but at the same time, I want to protect myself and not commit any stupid mistakes. If absolutely necessary, I can delay selling the house by couple of months or getting marriage license sooner (keep ceremony around same time), but either one would require explaining to family and while doable, not ideal. Delay selling the house would also possibly involve complicated family drama. What would you do if you were in my shoe? Any input would be highly appreciated. Thank you so much!