Co-Investing with my Sibling, Does Co-Borrowing Make Sense?

[Desmond Pressey]

Hi BP Community!

I'm happy to join a community of great individuals. I had a question about the best lending strategy for my first investment property. My plan is to split the down payment and profits with my sibling and transfer the title of the home to an LLC that we both will own. He's my younger brother and just started working and saving so this will probably be the only property he buys this year. I've had a couple of years saving up so I plan to close on at least one more property if not a couple more with either myself or some other friends.

For this first one, would it make sense to bring on my sibling as a co-borrower? I'm afraid that it may hurt his credit and put him at a higher DTI ratio. If the rent covered the payments that would that be an issue? I also would like for him to be able to build his credit. Would this be a good opportunity for that? Similarly, because I plan to buy more, would having a co-borrower give me more flexibility to acquire more property?

Thanks so much for your help BP community!

-Desmond

[Joseph Firmin]

Hi Desmond, Nice post. I've been in your shoes. It is great to have a sibling on board and you both can be learning together. The responsibilities should be clearly outlined about who will be doing what regarding the investment. It will be good for him and you if he is ready and willing. Does he share your concern about his credit and DTI? Does he know what DTI is? Is your concern more rooted in his lack of knowledge? If it is, challenge him to understand more the risks and increase his knowledge to get more involved before buying a property. There needs to be accountability and understanding.