Have you ever purchased a property with a partner? Need cash and don’t know where to go? If so, consider a partial ownership loan. With a partial ownership loan, the lender makes a loan to the partner who needs it, secured only by their interest in the property. The other owner doesn’t sign anything, and the only collateral the lender has is the signing of the borrower’s partial interest in the property.

The key is to work with a portfolio lender as banks that sell their loans would normally not make this kind of loan. Washington Mutual is one example of a portfolio lender. You may also talk to community banks in your area and see if they would make this type of loan. The lender would need to keep the loan in house until it is paid in full.

In the event of foreclosure on your loan, the lender becomes partners with your partner. Note that married persons cannot use this program to borrow against community property without their spouse’s signature.

When would doing a partial ownership loan make sense?
1. Inherited property where the heir wants cash for their interest.

2. Business partners who may own a share of a property and need to borrow where the other partners don’t. This could be a 4th or 5th interest in a property where there are 3 to 4 partners.

Real Estate maybe turbulent at the moment, however when you know how to take advantage of getting cash, being an investor can still make sense.

Happy Investing!

This entry was posted on Wednesday, November 28th, 2007 at 8:00 am and is filed under Investing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.