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Lake house multi-family financing?

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Frequent Contributor

Lake house multi-family financing?

Me and my wife, and a few other couple's are considering purchasing a lake house for weekend getaway's and I am curious as to how financing would work in this situation.

 

Most likely it would be 3 couple's splitting a property, how would we go about financing it? Would the loan have to be in one couple's name only, or could all three couples jointly finance the property? What type of loan's are available for this, how would underwriting work?

 

Just an idea thus far and trying to get our duck's in a row before we even get too serious about the matter.

 

Thanks

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6 REPLIES 6
Established Contributor

Re: Lake house multi-family financing?

Hello,

 

 I did that very thing.  I bought a lake home and financed it as a Second Home.  I was able to go 90% LTV and not 80%. The process is pretty simple. There are many options regarding the PMI. I decided to go LPMI so I wouldn't have PMI.

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Message 2 of 7
Frequent Contributor

Re: Lake house multi-family financing?

Good to hear, thank you for your reply

 

Specifically I am interested in hearing how I would go about doing this, could/would the mortgage be in all of our names, or would it have to be in just one couple's?

AMEX BCE ($39,500) CITI AAdvantage ($20,500) Region's Platinum Card ($14,400) Discover IT ($23,000) Macy's ($7,000) Chase FU ($10,000) Barclay's Aviator ($22,000) TU:778 EX: 781 EQ:791
Message 3 of 7
Regular Contributor

Re: Lake house multi-family financing?

If I were you, I'd contact a real estate attorney on this. The thing is, depending on your state, even if you find a lender who is willing, you would have problems if you're in a community property state. Generally speaking, lenders aren't going to go over 3 people on a mortgage, though some will go  up to 4. The issue that you'll run into is, if you're in a community property state, what the rights and obligations of the couples will be on the mortgage--in a CP state, most lenders would require all six parties on the deed. Even in an equitable distribution state, if  one couple gets divorced, you could be liable for buying out their share or, worse, forced by the courts to sell the property. Don't know your state or the state of your unions, so I say, consult an attorney. A better option would likely be for you to go in in cash. There are options to use HELOCs or other funding to purchase a property. If you're talking HIGH dollar value subsidized by renting it out off-season or when not in use, DO NOT RECOMMEND, but talk to an attorney. Good luck.

Message 4 of 7
Valued Contributor

Re: Lake house multi-family financing?

We did this very thing with 4 families. Each family used a HELOC on their personal home and we paid cash for the Vacation Home. We had an attorney involved to write up everything. Hold the home in a Partnership and spelled out every tiny detail and possibility. This home has been owned by these 4 families for over 10 yrs. After a few bad experiences we do Not rent it out and any issues with kids and their families have been mediated and dealt with swiftly.
Home is owned free & clear, we have reserves set aside for upkeep, maintenance and a big emergencies. . We run this house like a business!
Message 5 of 7
Frequent Contributor

Re: Lake house multi-family financing?

I do not live in a community property state. I am unsure of wether or not paying all cash would be an option, it will most likely have to be financed. We were looking at 20% down and 10-15 year term, with the possibility of renting it out when not in use in order to pay off the property quicker. Property prices at lakes near us are very affordable, the usual couples we hang out with at the lake were all together during memorial weekend when we thought of the idea, and the more we research on it, the more and more we realize it would be relatively inexpensive for all of us. I just wanted to get my duck's in a row by asking some financing question's before we got to serious, I am the kind of person who want's to have everything figured out beforehand rather than flying by the seat of my pant's.

AMEX BCE ($39,500) CITI AAdvantage ($20,500) Region's Platinum Card ($14,400) Discover IT ($23,000) Macy's ($7,000) Chase FU ($10,000) Barclay's Aviator ($22,000) TU:778 EX: 781 EQ:791
Message 6 of 7
Regular Contributor

Re: Lake house multi-family financing?


@JVille wrote:
We did this very thing with 4 families. Each family used a HELOC on their personal home and we paid cash for the Vacation Home. We had an attorney involved to write up everything. Hold the home in a Partnership and spelled out every tiny detail and possibility. This home has been owned by these 4 families for over 10 yrs. After a few bad experiences we do Not rent it out and any issues with kids and their families have been mediated and dealt with swiftly.
Home is owned free & clear, we have reserves set aside for upkeep, maintenance and a big emergencies. . We run this house like a business!


This is the way to do it!

Message 7 of 7
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