I've studied, researched, scoured, and found and great deal on a flip. Numbers are all very good. I've got an 800+ FICO score and I'll be doing (or overseeing) the rehab. I'll also be handling the resale. Only problem? I have a high debt-to-income ratio because my other investments are in my personal name. Banks and private lenders therefore want a cosigner. I have a family member who agreed to cosign... but wants half of the profits, stating that the deal wouldn't be possible without the work they've done to help qualify.
This doesn't strike me as fair. Am I being greedy? Is cosigning really worth 1/2 of a deal?
If not, do you know of any other methods to find a less expensive cosigner? Thank you.
@John Beede It's not really a question anyone can answer for you. What your family co-signer is saying is true. You can't get the loan without them. And after all, they ARE accepting the full risk of repayment should you fail. No small thing. Would you like part of something.... or all of nothing?
The more confident you feel in your own abilities (to rehab, then sell and pay back the bank), the more "unfair" this deal will feel to you. In that case, you might try hard money and give a strong pitch to the lender about your RE history up to this point. Usually, this money will be more expensive so you'll want to run your numbers carefully and compare the various scenarios. Best of all is to find a partner who can sign on to the loan AND help you with the work - then splitting the profits won't feel unfair.
Co-signing on recourse debt is risky; not saying that 50% of the deal is fair or not but it should be taken in consideration along with who is managing the deal, putting in the money etc. Are you able to find another lender or co-signor?