Purchasing Real Estate From Relatives
For anyone who is trying to do a transaction with a close relative the bank is going to require some additional information. It seems that financial institutions do not really like to do these transactions because you may be bailing your relative out of a bad situation. This is my first attempt at a weekly column so please bear with me.
After many years of reading the "Get Rich Fast With Real Estate" articles and never truly buying into their claims of instant money, I did end up realizing that Real Estate provides a great opportunity for anyone. After purchasing the home that I live in, which was a foreclosure (more on that in an upcoming article), I realized how hard it is to loose money with real estate. So, I finally purchased my first investment home.
My first purchase was a duplex with an upstairs and downstairs unit. It is located in the pleasant village of Fredericktown, which is a small town that I grew up in. After walking by this home hundreds of times when I was a child, I would have never dreamed that one day I would own this home.
I purchased this home from my Uncles and Father who had started a company a while ago and own several rental units around Ohio. For anyone who is trying to do a transaction with a close relative the bank is going to require some additional information. It seems that financial institutions do not really like to do these transactions because you may be bailing your relative out of a bad situation.
Even though this was not the case I was required to provide letters as to why they were selling the home and why I wanted to purchase it. Also some form of receipt, in my case a certified check receipt, was required to show that I had given the sellers some form of deposit to secure the contract. It had stated in the contract that I had given them $50, which I had in cash.
This was not good enough, so I had to obtain a certified check and give that to the sellers in exchange for the $50 cash that I had originally given them. The bank I was working with also required the past years mortgage statements from the seller to make sure they were making payments on time.
So for anyone who is wanting to purchase real property from a close relative keep in mind that it may require a few more hoops to jump through, but it is well worth it if the transaction will benefit both parties.
In my case it did because they were wanting to consolidate their units to a closer location and I was wanting to get started in this whole real estate investment community.
Jonathan Cochran
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