Good Idea Or Bad Idea? Need Expert Advice

**Rick.415** · 08-03-2009, 11:11 PM

Ok so this is a question for all you people with a profession in real estate. Ok so my mother and dad lost their jobs recently. We have a house that has been paid off and we are thinking about buying another house for me because i am about to have 2 kids(twins) and we don't have enough room for them. My mother is planning to borrow 100k out of the current house to put a down payment on the new house that cost about 300k-400k. Shes going to rent out the new house to make the minimum mortgage payments which is 1k-1.5k per month for 30 years till i get a job and can take over payments. Is this a good idea to borrow from the bank to do this or not do this at all. Money wise would we be losing money because than we would have to pay mortgage for 2 houses. My mom has no income or my dad so we are going to count on rent money.

We are in san francisco california if that matters. and we are looking to buy a new house in san leandro

**welovetampa** · 08-11-2009, 04:31 PM

I don't think any bank would lend them money even if they DO have equity in the home. They need to be able to show that they have the means to pay it back and they're both unemployed so that's not possible.

Loree@welovetampa.com

**wolfneyetna** · 08-12-2009, 05:13 AM

Even if they could get a mortgage (they can't, without income), this would be a bad move. You should never take on a rental property where you have to dig into savings to make the payment. If a renter defaults, it usually takes 30-60 days to get them out; then if they've trashed the place, another month to clean it up for the next renter.

Also - becoming a landlord should be a decision of choice - not of circumstances. I've seen way too many people literally give a property away - losing thousands or tens of thousands of dollars - because they didn't know what they were getting into in buying rental property.... and when they found out, they wanted out at any cost.

Third - I would recommend your parents not rent to friends or family.

**Greg** · 08-12-2009, 06:41 AM

It sounds like you need to get comfortable right where you are for a while. I don't think your plan will work. Lenders are not making loans without income verification these days.

**Hollywood Landlord** · 08-17-2009, 06:39 PM

It doesn't sound like an optimal situation for anyone, but i definitely wouldn't gamble on those odds even if the banks DO approve a loan. You would just be 'hoping and praying' that everything turned out perfectly (which it can), BUT a lot of times it doesn't.

You will have a rough time even if you do get the loan. Acting out of desperation even when you think you have a residential lease agreement locked rarely works.