Should I Partner with Dad on First Deal?

2 Replies

I am a very concerned about obtaining a loan for my first deal. My goal is to find a 2-4 unit property by December. I am willing to move in (out of state) and house hack to cut my expenses.

I have $50K I want to use towards a down payment + closing costs. I have another $10-15K for rehab if needed. If there are unforeseen problems, I have additional capital in stocks I can liquidate. I have 800 credit score. I have $0 debt.

My concern is my employment situation. I work as a “freelancer”. Last year I received 6 W2’s and total gross income was less than $50K. My rent is nearly 40% of my total income. Not good! I’m in a transition period where I’m trying to make a career change into something that will provide more income. It may take some time.

I’ve had conversations with a couple lenders (credit unions) and they say it will be very challenging for me to get a loan. They instructed me to get a better paying W2 job or cut my rent in half.

My father has (reluctantly?) offered to partner or co-borrow / co-sign so that I can obtain a loan. Ideally I would like to avoid this.

Has anyone been in this situation? Any advice? I need help identifying the pros and cons of partnering with my father who isn't necessarily interested in buying real estate (though he has the means and I think he should).

Lastly, am I better off waiting to do my first deal until I have transitioned into a new career?

@Daniel Whitmore

You have $50K in savings and are willing to move.  Can you find a place where $50K will buy you a house or duplex?  You can pay for it in cash and rent out rooms in the house or the other half of the duplex.  If the duplex needs a bit of work, rent out the best unit and fix the other while you live in it.  Then when the other side becomes vacant, move into the other half and fix it up.

That will get you started and give you time to save up for another down payment during your transition period....it will also more than cut your rent in half as you would almost be living rent free (even without tenants) and now your tenants are putting money in your pocket every month.