Asking a multi millionaire to buy me a house :)

NeptunesMoon

I have a good relationship with a multi millionaire and they did previously say they would be open to investing into any ideas and business opportunities if I had anything worth their consideration.

I'm not in a position to get a mortgage from a bank of anywhere near what I'd need to buy one where I'd like to live, but could easily pay one back with my earnings and also renting out rooms in the house.

First of all, would it be legally possible that something could be set up where somebody either buys a house with another party paying them back and once payments are finished, the borrower would own the house, or else the lender easily getting a mortgage of what would be needed from the bank, but the other party making the repayments and eventually owning the house. Of course if payments aren't made the usual thing would happen that the lender would take the property back or whatever.

I'm thinking if banks can make money doing this, then perhaps there's a way to make it an attractive investment if there's trust and willingness between the parties.

Let's say it was 500K, paid back over 25 years, what kind of offer would be attractive to make somebody see it as a good investment?

Cheers 😎

B.A._Baracus

Pisstake right?

KilOit

So much risk for the person giving you the loan for very little reward. A millionaire has a much easier and less stressful way of making more money with money than giving you a loan

Dav010

He didn’t become a millionaire by being stupid.

brainboru1104

"they would be open to investing into any ideas and business opportunities if I had anything worth their consideration"

I think you're giving this statement far more weight than they did. I'd love to hear their side.

Pawwed Rig

The return on mortgages is minuscule and when you consider that he will be taxed at his marginal rate on interest received and have little easy recourse should you stop paying him.

Adding to that the risk of the arse falling out of the market he would be absolutely crazy to give you a mortgage.

Buddy Bubs

The return any investor would need on this to make it worth it would render your mortgage unaffordable beyond belief. Say if he wants a modest return of 6% which could reasonably be expected if he bought into any sort of diversified fund, you would have to pay him 30,000 euro a year even before any capital repayments are made. He may deem this too high risk for 6% and I'd agree with him, so he may want 10%. Now you are looking at 50k before capital repayments.

This is such a non starter I'd suggest never mentioning it to him and keep your friendship.

NeptunesMoon

Hi cheers forr all the replies, some very helpful ones! Makes it sound like a not so wise investment opportunity for them so and would really only be an option if they felt altruistic, but I don't think the relationship is there yet 🤣🤣

I guess I could always just suggest he buys a house to keep it himself and rent it to me as a lead tenant?

Is getting somebody to go guarantor on a mortgage an option at all? Did it used to be an option and then they stopped allowing it or something? Is there any other work arounds to getting one?

Dav010

There are strict rules on lending in place which are dictated by the Central Bank. The rules are designed to stop people from getting into unmanageable debt. If you can’t meet the criteria for a mortgage, then there is unlikely to be a workaround. So you will have to do what everyone else does, save, buy in a cheaper area or get a joint mortgage with a partner.

No matter how good friends you are, no one is going to buy a house for you.

lomb

The problem in Ireland is the same problem they had in the Great Depression of the 1930s. The US government esentially set up mortgage gaurantee organisations that for an insurance premium would guarantee the mortgage. Really the government needs to do the same. Anyone that can afford rent should be allowed to get a mortgage. This could use the banks and negate them needing to hold capital. The government could then issue bonds if it needs to,current interest is negative or near zero I believe.

The fact that the government doesnt want to do this and never will is the same fact that any young person stuck in this position needs to think about emigrating seriously. By using landlords your effectively paying a middleman who has to borrow at close to 5%, pay tax on the profit and has less interest in maintenance than an owner would.

lomb

They could also tax landlords at 90% basically rendering domestic ownership as pointless other than as an inflation hedge or remove interest deductability. They have chosen not to. Young people need to choose to leave and NEVER come back.

brainboru1104

https://www.boards.ie/discussion/comment/118979301#Comment_118979301

How do insurance companies cover payouts in the event of a systematic crash like in 2008?

If banks don't need to hold capital, and thus remove the requirement for risk based lending (RAROC), does this not increase systematic risk? See above question.

What if global economic conditions change and the state cannot access cheap credit?

antoinolachtnai

The government. The government is insuring the whole thing anyway. If you lose your job and can’t pay mortgage, government has to house you. The mortgage is still going to be cheaper than anything you will rent

if the housing crisis isn’t solved there will be economic decline and the economy won’t be resilient to shocks. It’s the government’s job to avoid economic decline and make it resilient. To do that steps have to be taken to increase building supply. If that requires advancing some credit insurance to builders or homeowners, that’s what has to be done.

airy fairy

Your friend is willing to invest in something with you/for you. Buying a house for you isn't an investment, the return is crap.

All that aside, there's no solicitor going to advise your friend to lend you money either.

brainboru1104

I bet this was something he said after a lash of pints. There's no way he'd invest in some random idea of yours.

0ph0rce0

https://www.boards.ie/discussion/comment/118981014#Comment_118981014

We hang around with a guy on a daily basis, always out for pints. He sold his company for double figure millions. Tells the lads he'll buy them gaffs all the time.

You're spot on. I always laugh 🤣

Love drink.

NeptunesMoon

cheers everyone! So theere's no way to get a guarantor on a mortgage anymore even if the guarantor has a lot of money and good finances?

seamus

The only way this works for an investor is if you get him to buy and own the house outright and you pay him a fixed small rent. You draw up a contract which gives you a lifetime lease on the property and binds you to an obligation to maintain the property while being allowed to modify it as you see fit and at your own cost, provided those modifications increase the property's value.

You get a home with absolute security of tenure, he gets a long-term property investment generating a small income without the overhead of being a landlord.

NeptunesMoon

@seamus that sounds really intersting! have you ever heard of something similar being done before? If you're saying a lifetime lease, whose lifetime? I'm more than a decade younger than this person, so how would they ever profit from the property if I'm in it until I'm old and they have already passed away? It just goes into a will for their family or what?

I'd be interested to hear what kind of proposal i could make to make this sound attractive to them, i don't want to come across as an eejit with some made proposal (like my op 🤣🤣)

Pawwed Rig

https://www.boards.ie/discussion/comment/118984874#Comment_118984874

I can't see any serious investor going for this. He would need to have absolutely no ideas as to what to do with his cash to consider tying it up for so long for little reward. He would be better off just buying apartments and renting them on the local market or to one of the council schemes

seamus

https://www.boards.ie/discussion/comment/118986561#Comment_118986561

I was really only positing a what-if, more than a serious proposal. If it was this easy, all investors would choose this route. As @Pawwed Rig says, they would get a better return by buying apartments and handing it over to a lettings agency to manage.

Any kind of agreement I laid out would nearly need to be a favour between friends and not a serious investment proposal, unless you personally planned on throwing €100k of your cash into renovating his property.

Lifetime leases do exist, there's a specific name for them. But they're usually done where you have an elderly tenant that the landlord wants to protect if/when the property is sold, or where a property owner has died and they want to give another person the right to stay in the house (say a child or sibling).

Jeanne Calment (oldest person ever known to have lived) famously had one of these with her solicitor. At 90 years old, her solicitor agreed to buy her apartment. The arrangement was that she could live in it for the rest of her life, and he would pay her a monthly fee. Once she died then the apartment became his. He obviously thought he was quids-in, this old bird has at most five years left, cheap apartment for him.

She lived for another 32 years. He did not. And he ended up paying her twice the value of the apartment before he died.

ohnonotgmail

https://www.boards.ie/discussion/comment/118986935#Comment_118986935

Lifetime leases do exist, there's a specific name for them

A life interest

Deeec

https://www.boards.ie/discussion/2058243021/asking-a-multi-millionaire-to-buy-me-a-house

First of all how do you know they are a multi millionaire - I am an accountant and often find that the ones with the large houses, designer clothes and expensive cars haven't a pot to piss in. Its all done on debt and all for show. Ive seen people offer to invest in a friends new idea and then want me to come up with reasons why the friends idea is unworkable - reality is though they dont have the funds to invest and just want to be the 'big fella' by making the offer.

If this person is as wealthy as you say and they do proceed with this you are leaving yourself very vulnerable. What if their situation changes and they have to sell assets - your house would probably be first on the list to go and you would be left high and dry.

bertiebomber

Ask him to buy a property & rent it to you forever until you have paid him back the whole amount. When you have paid it then he gives you the property in his will you would incur inheritance tax but factor that in. Its another angle he could take out a mortgage & you do the re payments so he essentially owns it till you have paid it off. Have the chat anyway over a few pints wont hurt everyone is trying to get a home it s a very real dilemma.

Pawwed Rig

https://www.boards.ie/discussion/comment/118987110#Comment_118987110

That is an even worse investment. Why would anyone agree to do this?

bertiebomber

=The prevalence of absolute greed is what has our society the way it is. I am landowner and i am giving a site to young person who is trying to get ahead. I have plenty and the value of my sites has tripled in the last few years. This person will in turn be living near me as i age and will keep an eye on me what not to like. if everyone who has a very full plate was a little bit kinder to fellow IRISH people we might rise again once the woke government are ousted.

SteM

You're talking about philanthropy, the OP specifically said his friend was open to making an investment.

Donald Trump

OP. You could also propose an investment whereby the millionaire gives you a million quid, you go to Vegas and put it all on black at the roulette wheel. Explain to him that if you win, you will give him 1.2m and keep 800k for yourself.

To be fair to the OP though, their sense of the way things should work isn't too far off many posts you read on here that complain that a person should be able to sign a loan agreement to buy a house and basically be guaranteed that a tenant will cover the mortgage for them with zero risk or effort after the signing.

Donald Trump

https://www.boards.ie/discussion/comment/118979301#Comment_118979301

2008 called. It wanted its bubble and crash back.