My girlfriend and I are in our early 20's and are about to purchase our first home. The area we live in is quite expensive and it's hard to find a nice home under $200,000. A very good older friend of ours as offered to give us a considerable amount towards the down payment so we can afford a better home. His terms are simply that we pay him back, interest free, when we sell the home in a few years (2-4), which we plan to do since we both anticipate having considerably higher incomes in the near future.
I do not believe in "freebies" and would like to come back to him with the offer of joining in ownership with us as an investment, where my girlfriend and I live in the house and he is simply an investor. Then when we sell the house he will receive his percentage share of the appreciated value. Too me this seems like a win-win situation. My question is what is the best way to structure this? I am concerned with legal issues, tax issues, etc. Can we simply have three owners on the home with one owner (my friend) owning a smaller share of the home and not occupying the home?
Also, what if he absolutely refuses to accept ownership and wants to lend the money to us interest-free. Can he simply right us an interest-free loan? Thanks so much for the help.