I've been lurking around and it seems like some members on this board are very knowledge-able on the real estate issue. I have a question and would like you guys ideas

 

the disadvantage in these types of partnerships is that partners can squabble on many things. if you and your brother are ok it may not be a big deal.

i think setting up a partnership is going to be in your best interest(s). In that, you define who owns what % of what.

On your last question, I don't think there is a way. The best way would be to invest the $50K into the partnership. Tax-wise, I don't think you can deduct interest on a second home, so there are no tax benefits there.

 

Interest is deductable in any case I thought...second home or investment type.

I own an investment property and try to run it on the negative side to get the tax savings, so if it even looks like it will run positive (Income less depreciation, taxes, interest, improvements, etc.) I will find a way to put it into the negative...like that new garage door opener or power washer, whatever.

In any case if you and your brother both go in on the house, you may be able to get away with a lower down payment since YOU do not have a property already and will be able to claim it as a primary residence, or at least long enough to get the mortgage you want. If you are going to let the mortgage company know it is an investment property you will need at least 20% down and I don't think you will have access to the best mortgage rates out there. I would put it in your name, have him as the co-signer and split the ownership however you would like. If both of you are on the title as owners you basically have to claim it on your taxes for the percentage of ownership you have.

 

Sorry I forgot to mention if you claim it as a primary residence you should be able to put only 5 or 10% down and you could use the rest of the money on other investments, etc. should you wish. Not knowing where you are located, I couldn't say whether it would make sense to put the money into the down payment or into the stock market, etc.

 

Thanks for your inputs Steven975 and 2002S2K....

I keep my permanent address in Seattle but I travel around the country for work. Except for the stock market (which I blew my entire savings back then), what other type of investments do you think make sense to put the money in? I am thinking of open and account with ING direct and/or buying CDs. Other than that, I am so busy with my work right now I don't have much time to do more research on other investment types. Thanks again..

 

honestly, i don't think now is the time to load up on real estate. the market has had a very very very big run in the last couple years and it is very likely not to continue, especially with rising interest rates? why? Often, it is the mortgage payment that determines what a buyer can afford. up the interest, and you can afford less house for a given payment. thus, there are fewer buyers at every price, so prices must come down.

 

How is the Seattle market?

I mean there are some places that may see prices decrease as the adjustment occurs, but for the most part prices will just stay level for a while and others have the potential to be virtually untouched by the correction (see Florida)