Probably a lot of shady things would have to play together perfectly to pull this off. You would have a hard time protecting your 3%. It is probably fraud. I wouldn't do it.
If they are buying FHA they have to prove that they did not borrow the down payment. I recently had to sign a letter for my brother that stated that I gifted $xxxx so that he could get his FHA loan. I think what you are talking about is not legal. Call any lender that deals with FHA; this is a pretty well known loan type.
I don't know if it is necessarily "illegal" maybe more like working a loop hole? It would be like doing a live-in flip; where the owner occupies the residence and flips it while they live there. In this case the occupant is your business partner and the company you set up could fund the down payment or you could gift it to him? You would have to occupy the residence for at least a year I believe? Check with a real estate attorney and or a loan officer.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.