My much younger cousin has come to me for advice about investing. I told her I'd think about her situation and get back to her.

Her brother and his new wife are looking for a house - first time purchase - they eventually want to get into landlording as does she.

She wants to purchase with them but since it's not a true rental isn't sure how to set it up.

I think she should give them 'a loan' and charge them interest.

What do y'all think? Any ideas?

Thanks.

Wait... she wants to buy a house with them that they will live in? NO NO NO. nothing good will come of that! Don't even loan them the money for it.

Now if she wants to buy a rental with them.. unless she can't get enough money to do it herself, then maybe, but still brother AND wife, is not going to go well.

There's no reason or need for her to hold hands with them on this.

If she follows your advice and the grand idea tanks, you're going to be the bad guy.

Has anyone said, "Bad idea" yet? :)

Primary residence = primary residence

Rental = Rental

Family =/= tenants

Family =/= bank

The cousin's brother and wife need to buy their own house. If they don't have all cash for it, like most people in the world, they need to get a mortgage. If they can't get a mortgage, they don't need to think about being landlords, unless they're specifically shopping for a duplex or something, with the intention of renting out half and living in half.

Advise her to never rent to relatives, then give her a reading list of recommended landlording books, then tell her about local landlording groups. Then stay out of it.

What's about to happen is she's about to do something stupid then blame ALL of it on you if you give her any form of advice in making this deal work. She'll cherry pick what she wants to hear, ignoring the rest.

Agree with all of the above. Ponari, you know better than this. Don't get involved with either one unless both cousins have their own money to invest on their OWN purchases. You can advise pros and cons of the various properties then let them make their own choices and walk away. Never say 'I told you so.'

Even with distant family or good friends I will have a partnership agreement. For example, my friend has little money and little credit. Wants to buy 1 unit of a 10 plex so they can live there and manger the place. I agreed to allow them to buy 2 to 3 units with little down. But if they go on vacations like 50% of the time and are never home when they are in town, what kind of mangers will they be? Terrible, putting the burden on me.

Ponarai,

Give this advice to your cousin: hand them $5000 cash. It will be cheaper than entangling business + family + novices.

This falls under "If you have to ask you are not ready".

I get hit up a least once a week. My standard advice:

#1 take Ramsey's Financial Peace class and learn how successful people handle money - investing, insurance, wills, etc. After 40 years in business I learned A LOT! in a few hours of Dave's video training.

#2 find a local RE assoc, join, and show up to learn.

BRAD