Real estate has always been a family business. But some New York City parents are taking things a step further.
An increasing number of mothers and fathers are helping out their offspring by supplying them with mortgages when buying an apartment in the city, according to the New York Daily News.
“Cash is king in this market and that makes it extremely difficult for first-time homebuyers,” Douglas Elliman broker AnneMarie Tamis-Nasello told the newspaper. “It’s the first thing sellers look at. They go right to the all-cash offers.”
The phenomenon, although increasing, isn’t all new. In 2014, roughly 6 percent of first-time home owners received a loan from a family members, according to numbers from the National Association of Realtors cited by the newspaper.
Getting a loan from a traditional bank can take longer than the average time a Manhattan apartment is on the market. Dealing with mom and dad can be a lot quicker.
Issuing a parent-child mortgage doesn’t mean mom and dad are simply gifting their kids apartments. Some give their kids the same rates a bank would have, others will offer up lower interest rates. But often, it is still a win-win situation for the whole family.
“They still get a good return on their money even as they give their kids a competitive rate,” Compass agent Julianne Bond told the newspaper. “The kids are establishing a credit history and getting the same tax benefits they’d get with a regular bank mortgage.” [NYDN] — Claire Moses