Possible investment opportunity. Thoughts?

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  • I'll get right to the point.

    This person I know is in some financial trouble and is facing foreclosure due to missing work from illnesses. I could co-sign on a 5,000 dollar loan that would get all the payments caught up. In turn, this person agreed to put me on the deed of the house as a co-owner (just the 2 of us). I don't plan on moving in. Also, these are loan payments I can make and if this person does not make the payments I should have no trouble making them myself.

    So, 2 questions:

    1) Do I risk losing anything more than the $5,000 loan + interest?

    2) In what ways could I stand to make a nice profit if I co-owned a house? (never owned a home before).

    Thanks in advance.
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    fenderbender123
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  • Don't mess up your future trying to help this guy. Buy your own house and get your feet under you, then worry about investing in others issues if you must.

    Also just because he agreed to put you on the deed to the house doesn't mean he will, and if he does and then defaults on the payments there as well then you could be stuck paying the $5k plus his house payments as well. Your credit could take a big hit if things don't go well.

    My advice - NO. Don't do it.
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    tomahawk
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  • You have a tough call to make..

    1- If you go on the deed and if for some reason it goes under then you are liable for the total owed on the property not the 5k only.

    2- Look at it as helping a friend. Hard to clarify a profit on a partial ownership of a property. The market is still very fragile.

    I'd give it a lot of thought.. Personally, I see a lot of red flags. No offense to you or your friend. Your a good friend for considering it.
    Good luck..
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    HOLLYWOOD
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  • So is being on the deed the same as the mortgage? Because this person made it clear that I would not be on the mortgage loan, just listed as an owner on the deed. Or is that essentially the same thing?
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    fenderbender123
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  • fenderbender123 wrote:So is being on the deed the same as the mortgage? Because this person made it clear that I would not be on the mortgage loan, just listed as an owner on the deed. Or is that essentially the same thing?


    The lender will have possession of the deed. And if your added to the deed as an owner, your also liable for the loan. I'm not even sure you can be added to a property deed that is technically still owed for without being on the loan.

    I'd pass on it but if your considering it, talk to a real estate agent in your state..
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    HOLLYWOOD
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  • I was a title officer for six years. If your friend has other debts, they could attach to the property. And could become your problem when you vest ("get on title"), effectively killing any equity in the home.

    Be careful.
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    nanomoz
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  • A terrible idea. If you have $5,000 to help out, give them the cash. If you don't, don't put your good name on the line.
    I enjoy ruining threads by making them about personal attacks and then commenting about how personal attacks make the other person's argument invalid.

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    SonicHawk
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  • Thanks for all the input.
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    fenderbender123
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  • Updated:

    So I do live in Montana. Not sure if the laws are different than Washington in this regard, but what I'm being told by the lender is that if I'm put on the deed to this house, I will be able to own half the house undisputed but will not be responsible for the mortgage. If the person who is paying for the mortgage defaults and gets foreclosed, then none of it affects my credit and that I could have legal recourse to turn around and sue the other person for not paying for the house that I'm supposed to half own. If this person turns around and sells the house in the future, I'm legally entitled to half of the equity. The county owns the deed to the house with a lien from the lender. This is all according to the lady who can put me on the deed.

    So ultimately it sounds like my only risk is that I might get stuck paying for this small loan.

    So...any thoughts to this?
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    fenderbender123
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  • Do you stand to make anything on the 5000 dollars? Or is it simply an interest free loan for your friend?

    I really don't see how this is a good idea at all.
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    Sarlacc83
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  • fenderbender123 wrote:Updated:

    So I do live in Montana. Not sure if the laws are different than Washington in this regard, but what I'm being told by the lender is that if I'm put on the deed to this house, I will be able to own half the house undisputed but will not be responsible for the mortgage. If the person who is paying for the mortgage defaults and gets foreclosed, then none of it affects my credit and that I could have legal recourse to turn around and sue the other person for not paying for the house that I'm supposed to half own. If this person turns around and sells the house in the future, I'm legally entitled to half of the equity. The county owns the deed to the house with a lien from the lender. This is all according to the lady who can put me on the deed.

    So ultimately it sounds like my only risk is that I might get stuck paying for this small loan.

    So...any thoughts to this?


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    LymonHawk
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  • Here's my rule of thumb: If you're posting on a sports-related message board whether or not an investment is a good idea .... it isn't.
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    Hawkstorian
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  • Personally I think it's a bad idea to cosign on any loan. I was taught to never, ever do that. If you have to 5k to give him thats fine.
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