How to Get Rich Buying Real Estate From Your Parents With No Money Down and No Credit

You can get rich from the equity appreciation of real estate by buying property from your parents using traditional or creative financing that may or may not require a down payment or credit.  Whether you are a first-time home buyer or an experienced investor, you can buy any type of property from your parents from a home you live in with them to an investment property you rent out to tenants.  The following lists some reasons why you may find it faster, easier and financially more lucrative to buy from your parents than anyone else.

You Don’t Have to Buy an Entire Property

When you buy from your parents, you can purchase any percentage you want like 10%, 50% or 75%. If you pay less-than-full price, you will have lower mortgage payments and buying a house is more affordable. Regardless of what percentage you own, you still get the benefits of home ownership such as equity appreciation, mortgage interest deductions, property tax deductions and capital gains tax exclusions.

You Can Share the Responsibility with Your Parents

When you buy a partial interest in a property, you and your parents share the responsibility of owning it including the mortgages you each carry, the property taxes, homeowners insurance or homeowners association dues, and maintenance. Because you have more than one person responsible for a property, you can rely on each other for financial strength in the event of hardship.

You Can Elevate Your Status From Renter to Owner

Are you already living at home rent-free or paying rent? Is so, why not buy into your parents’ house, since you already live there, and get an equity stake in their property? Then, you are no longer living with your parents but living in your house that you own with your parents. If your parents have more than one property, you can buy into one of their secondary or investment properties and live on your own.

You Don’t Have to Get a Loan From a Bank

When you buy from your parents, you don’t have to qualify for a loan from a traditional lender such as a bank which has income, asset and credit requirements because your parents can act as a bank and give you seller financing for your purchases.

You Can Create Your Own Home Loan

When your parents act as a bank, you can get favorable loan terms by structuring your own payment schedule with a manageable loan amount, lower-than-market interest rate and repayment term of your choice.

You Don’t Need a Down Payment

Unlike getting financing from a bank which has down payment requirements, you can buy from your parents with no money down.

You May Get Property Tax Benefits

Depending on the state you live in, your property taxes may not be reassessed at current values when you buy from your parents or grandparents because of a parent-child and grandparent to grandchild property tax reassessment exclusion. This is a huge benefit when parents and grandparents have had ownership for many years and have property taxes based on the values of their properties at the time they purchased them.

You Can Get Gifts From Your Parents

Your parents can give you cash or equity gifts toward your purchases, reduce the principal amounts of any loans you owe them and allow you to buy at a discount. Anyone can gift a limited amount of money in any given year to any number of people they wish without having to report it to the Internal Revenue Service. This is a way your parents can sell to you without you having to repay the entire debt you owe them. They can also credit you money at the close of escrow toward your closing costs by deducting the credit from their sales proceeds.

You Can Turn Your Financial Supplements into an Investment

If you are supplementing your parents financially because they don’t have enough to live on in their retirement or for any other reason, you can turn your supplements into an investment by buying into your parents’ home and making mortgage payments to them. As a result, you will have an equity stake and the benefits of home ownership.

You Can Get Benefits if You are a Realtor Buying From Your Parents

If you are a realtor, you can get cash from your parents at the close of escrow. If there is enough equity in a property to pay off any existing liens and pay you a commission, you can get a traditional loan to buy an interest in your parents property and get a commission for representing yourself as the buyer, or both you and your parents as the buyer and sellers.

You Can Still Get Rich When Your Parents are Not an Option

If your parents are not an option to buy from, consider buying from other family members and any other sellers.  You can purchase a partial interest in real estate and use seller-financing to facilitate your purchases. Also, think about joining forces with siblings, friends, roommates or other buyers to increase your buying power.

It May Be Easier to Buy From Your Parents than Strangers

There is an abundance of resources right in our own families but many of us overlook this fact because we are trying to achieve financial success by ourselves. Because your parents have worked their whole lives to achieve what they have, one of the smartest things you can do is work with your parents and build upon their success. 

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