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Discussion Starter #1
Trying to figure out what the best course of action is here...<br><br>
We live in the highest COL city in the country (basically tied for first) and getting ahead and owning property is pretty damn impossible on 2 upper middle income salaries. Pretty much your entire salary goes to rent and the basics, and god forbid you don't have family for occasional childcare. There just isn't a way to save money when every penny is going towards just living. Moving to a lower COL area isn't an option at the moment, both because we love it here and because our jobs cannot travel.<br><br>
So we have our name down on every city sponsored lottery (meaning you'd get a family size apartment for MUCH below cost)... but that can take a lifetime, and usually you'll never come up.<br><br>
Honestly, every person we know who owns in this city either has a REALLY high paying job or their parents paid their down payment. We don't have either of those options.<br><br>
To add another complication-- we are living in a great area now, but can only afford a 1BD here... we're needing another BD at this point as our son gets older, and my mother is having a really hard time living alone (disabled and recently widowed) and I know she'll need to be with us at least part-time.<br><br>
My partner's parents have 3 apartments in this city and one of them is a 3 BD and very spacious and in a nice area. They want to rent it to us for a little while, then give it to us. When they give it to us we'd still have a $900/month maintenance, which is really NOTHING in this area. The apartment itself could probably sell for $650+, as is. If we renovate, in the future we could probably sell closer to $1 million if we ever needed to move.<br><br>
Problem is it needs some work. It's technically livable, but we'd really love to make it *ours.* We don't know how to take out a big enough loan (at a low enough interest) to renovate without owning it and using a refinancing (though we wouldn't have a mortgage, not sure how that works either). We'd like to invest maybe $50K-$100K into it. Truthfully we haven't looked into it yet (have not had the time!) so I thought I'd throw it out there to see if anyone knew how you'd go about that. (Construction loan?)<br><br>
Paying back that loan plus the maint. would be a DREAM amount to pay per month for us. It would free us up to quickly pay back college/car debt and put more away into college/retirement. We also may need to pay for private school as the zone school in that area is not ok. (I'm a teacher in this city, so I know how to do gifted/talented testing and lotteries and magnet schools and such, so we may have options.) But at first we'd be renting (same as we pay now) and paying the loan.<br><br>
To complicate things... one might say "why not just move in as is and don't start renovating until you own?" when our monthly expenses would go way down. Well... the apartment would be empty a good 5-6 months before we moved in and it would be just wonderful to use that time to renovate so we don't have to when we are living there with a baby and potentially a grandma (and we need some renovation to make it livable for her too, and I'd like that to be before this coming winter when she has the hardest time living alone). I'd love if I could find a way to make this an option.<br><br>
Any advice? Not sure if I made everything clear. It's an amazing opportunity to stop living month to month and finally be invested in something!
 

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I would probably try to prioritize what needs to be done prior to moving in... like, I would assume the stuff for your mother needs to be done before you move in, maybe painting, or things that like that. Can you get the list of must dos down enough so that you can accomplish it in 5-6 months without a loan?
 

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Discussion Starter #3
Yes-- we could. However, the rest of the renovations are big things that would seriously disrupt our lives (gutting the kitchen/bathrooms especially, tearing down some walls) and I'd LOVE to not be around during that... and we wouldn't have anywhere else to live if we did that at a later time. Yes, we could move in with enough renovations to make it livable without taking out a loan, and we'll do that if in the end it seems to be the most reasonable choice... but we would absolutely do these renovations down the road, if only for the fact that it will really add to the value of the place-- a renovated 3 BD in that area is pretty unheard of.
 

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That makes sense... Most of my family is from NY and I have some idea of how crazy housing prices are around there! My aunt and uncle could only afford a 2 bedroom apartment on a stock brokers and a doctors salary... I think you would be able to get a home equity loan once the place is techincally yours, would your partners parents be open to "giving" it to you earlier but having you make payments to them for a set number of months so you guys could get a loan?
 

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Sweat equity.<br><br><br>
Also, I can't help but wonder what types of renovations you're thinking about. My home was built in 1953 and we did a $20K renovation 5 years ago after significant hurricane damage. However, nothing structural was really altered either in the kitchens or bathrooms other than some new fixtures. I put down pergo flooring and tile.<br><br>
Those sparkly new kitchens from Ikea sure do look nice, but #1 they would look atrocious in this retro space and #2 I can't afford it... still paying off house loan from the hurricane.<br><br>
So can you live in your partner's parent's apartment for a while until you save up enough to fix it up here and there or is having the place gutted *truly* necessary?<br><br>
Personally, I'd rather live in a Victorian house that was falling down and still had it's original fittings than live in a Victorian house that was disastrously and inaccurately "restored" in the 80s.
 

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Getting a loan right now is pretty hard to do. I would see if you IL can give you the house now so you can get the money that way. Good Luck and can I say I'm so jealous, you are very lucky.
 

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Discussion Starter #7
FloridaBorn--<br><br>
Yes, again, we COULD live in it with just a little work. But there is no reason not to do a huge renovation when it would add $400K to the value of the apartment. The way it is laid out right now is just a little more old fashioned-- separate kitchen, 2nd bathroom is not en suite with the master bedroom, no shower in that bathroom, etc. Things that buyers really look for here. We know how to make it look like the apartments we've toured that sell for much, much more, we're just trying to figure out the best way to take out a loan. And yes, we do want to invest more than $20K because the apartment has space and location (sooo rare) and if it also had a high-end renovation done then the value would go up considerably.<br><br>
And when you don't have a mortgage, a 50-100K loan is not a lot, by comparison. Even if we did get a city sponsored (drastically reduced) apartment, it could still be $400-500K, and that would not be for a 3BD!<br><br>
Maybe this is the wrong forum to post this in, because it doesn't seem to be a "frugality" issue, but it is "finances" issue-- i.e. is our best bet for a loan really through ownership? We could probably get it in our name sooner if that would make that much of a difference. That was my question.
 

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I can totally see why you would want to do the renovations before you move in... IF you can get it in your name sooner, then getting a 50-100K home equity loan on a home with NO mortgage, that you own out right, that is work 650K+ should be no problem. So yeah, I do think that getting it in your own name sooner would be the best way to go about it.
 

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We moved into our house before we gutted the kitchen. I regretted it until I realized what huge mistakes I would have made. Because we lived in it for awhile I've been able to renovate the way we live, not the way we think we'll live.<br><br>
We gutted and remodeled the main bathroom before we moved in and there are several things I deeply regret.<br><br>
I'd live in it before I do major renovations.
 

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I live in NYC too so I totally understand where you're coming from. You are sooo lucky!!! That's a pretty incredible gift. It seems like owning the property would give you the "security" for a secured loan. You'd be offering your property as collateral. Seems like the way to go. If your partner's parents are concerned about just giving it to you, they could "sell" it to you with you making payments to them that would equal what you would have paid them renting from them.<br><br>
On another note, would you mind posting or pm'ing me your sources for lotteries or other options in NYC? Thanks!
 

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What are your DP's parents time line on giving the home? What are their reasons for having you live there first and then gifting it? Do they realize the tax implications of a $650K gift?<br><br>
Probably the most straightforward way for you to get the house with the renovations would be to "buy" the house from DP's parents for (total amt they wanted in rent) + (total amount you want to spend on renovations) and just take a mortgage out for that amount. If that were, say, $150K you should have NO problem getting a mortgage. You could then take the $150K and pay off DP's parents all at once (or over time if they would prefer) AND have all the money to make improvements. You could even use the "extra" to pay your mortgage while you are not yet in the home. Or take a smaller loan.<br><br>
Good luck, it sounds like a great opportunity. I have never known *anyone* who was happy they put off a major renovation until they were more ensconced in the home. Moving into a newly remodeled home would be so nice for your family and it sounds like a great economic move based on the generosity of your DP's parents. I haven't seen it oome up in this thread, but are you aware of *all* the obligations/assumptions that come along with this gift?
 

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Discussion Starter #12
To answer Utterly Curious-- we actually *have* lived in the apartment before. I lived there off and on a few years (still had my own place before we "officially" moved in together) and my partner lived there with his parents for 10 years growing up, and 5 years as an adult renting from them when they moved out. So we have spent a lot of time imagining how to make it amazing. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/wink1.gif" style="border:0px solid;" title="wink1"><br><br>
*All* obligations/assumptions is an interesting question, one that would entail its own thread altogether. It seems impossible to know with 100% clarity that this would never have any in-law issues involved, so we've decided to do it for the sake of our son and our family's financial future. To be fair, my partner's parents are not wealthy, they are upper middle income but bought well in the 1970s, when 3 BD NYC apartments were about $35K. When they got 3 good deals on apartments, it was always their intention to have their son raise his family in one of them. However, we've had some ups and downs with them and it's always hard to predict the future.<br><br>
ETA: They've done similar renovations on their other 2 apartments for them to live in and rent out, but this one they just kept waiting for my DP.
 

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I'm not sure I'd be comfortable investing $50,000-$100,000 in something that wasn't <i>officially</i> mine.<br><br>
Them gifting the apartment to you is amazing, but cover your tails and make sure you have a very clear, very tight paper trail. I'm not saying they're not good for it, but cover all the "what-ifs" including what if they pass and technically their asset is to be divided amongst all kin, etc.<br><br>
Just be sure to cover your tails.
 

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Discussion Starter #14
Ahh yes. The written agreement is that if we invested money and then for some reason didn't own at some point (probably because we move out of state) then they will sell it and give us back the money we invested.<br><br>
There are no other kin, also. My partner is the only person in their will.
 
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