Contractor · New Orleans, LA · Member since 2015 · 6 posts · 0 votes
Hello all,
I am looking at a duplex for purchase. A friend had expressed interest in getting into real estate a while back, so when this duplex presented itself, I contacted him to find out if he would be interested in partnering - he was. As negotiations with the estate from which we are purchasing are ongoing, he develops an attachment for this home and decides that he wants to move in in order to get out of his current living situation. While I am ok with helping him get out of his situation, it is of the utmost importance to me that I receive cash-flow and the equity in this property, as it would be my first rental. My intent is to leverage the equity in order to purchase more properties in the near future, and this house has the best combination of location, conditions, and potential than anything else available to me. If the plan is to leverage the equity in this property for future purchases, should I expect him to pay full market rent? I'm trying not to cut him out, despite the fact that I know he needs to just buy himself a home and come back to me when he is ready to invest.
Contractor · New Orleans, LA · Member since 2015 · 6 posts · 0 votes
7y
Additionally, by occupying the property, does he disqualify us from combining this property into a portfolio loan in order to leverage the equity, or other investment loan opportunities?
Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
7y
It seems like possible problem. Rental ownership has enough problems already, do you want another possible one down the road.
The plus side of living there is possibly getting a lower down payment loan (FHA), but it seems like it would put the non-living there person in the backseat somewhat vs. being a co-driver.
Investor · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
7y
Is he in a situation that be can buy it once it’s renovated? Consider it really a flip, he pays market price for it when it’s done, gets a mortgage and you get half the profits (or whatever you agreed upon). Then you wash your hands of it and go get yourself a rental.
To me, getting out of it cleanly might be your best solution. Half-renting a friend/partner a property seems like it could get messy quickly.
@Joseph Chauffe You bought it as a rental. If he wants to rent it for market value with a lease, I'd say go for it. But keep the expectations clear and treat it the same as you normally would. He still pays rent, and after all expenses, you each get 50% of the profit.