I have an existing property that a JV money partner is interested in. What is the typical process to JV an existing property? I've been thru the JV Secrets binder, but REIN's material doesn't seem to cover this.
As I understand it:
1) Do an appraisal to determine current market value.
2) Money partner comes in with 20% for downpayment + closing costs.
3) Right now, I'm 100% on title. After JV-ing, we are now 50/50 on title.
4) Right now, I'm on the mortgage (but I no longer qualify for mortgages at all due to personal circumstances). After JV-ing, money partner qualifies for the mortgage completely himself.
5) I will take the 20% downpayment + 80% new mortgage and discharge my existing mortgage. I will then be left with the difference as capital (whilst still retaining 50% ownership).
6) JV agreement will be in place, and both parties will have independent legal advice.
Questions:
1) Any important points that I missed?
2) Even though we are 50/50 on title... assuming that he has enough income and credit, is he allowed to qualify for the entire mortgage himself? Or because I am 50% on title, do I need to qualify for my 50% portion of the mortgage? (NOTE: if it's the latter, this would screw up the entire deal because I can't qualify)
3) Will this 50% transfer of ownership trigger any capital gains taxes? Any other accounting implications I should be aware of?
As I understand it:
1) Do an appraisal to determine current market value.
2) Money partner comes in with 20% for downpayment + closing costs.
3) Right now, I'm 100% on title. After JV-ing, we are now 50/50 on title.
4) Right now, I'm on the mortgage (but I no longer qualify for mortgages at all due to personal circumstances). After JV-ing, money partner qualifies for the mortgage completely himself.
5) I will take the 20% downpayment + 80% new mortgage and discharge my existing mortgage. I will then be left with the difference as capital (whilst still retaining 50% ownership).
6) JV agreement will be in place, and both parties will have independent legal advice.
Questions:
1) Any important points that I missed?
2) Even though we are 50/50 on title... assuming that he has enough income and credit, is he allowed to qualify for the entire mortgage himself? Or because I am 50% on title, do I need to qualify for my 50% portion of the mortgage? (NOTE: if it's the latter, this would screw up the entire deal because I can't qualify)
3) Will this 50% transfer of ownership trigger any capital gains taxes? Any other accounting implications I should be aware of?