Has anyone ever leveraged someone else's first time home buyers status?

Question

Is it possible to partner up with a first time home buyer with no money to buy a quadplex? What are the loan and legal implications?

I assume that some sort of LLC or partnership deal would need to happen first. But I was wondering if a residential loan would take my credit into account or both our credits?

Steven Hamilton II · Answer

It could be considered mortgage fraud if you don't disclose things properly. Their source of downpayment, any other side agreements on the property etc.

Theoretically, You may be able to co-sign or be listed on the deed despite not being the occupier......

I just hit post 3k.

David T. · Answer

Sorry to go off topic here, but congratulations to Steven Hamilton II and thanks for all your posts - always informative.

Greg B. · Answer

Not a real estate lawyer....

You need to stay away from the title

You need to stay away from the loan

If you want this to be advantageous to the both of you have him own the house, set up entity with him as primary/general/etc and you as co-something/limited/etc, open bank account for this entity, have him place HIS property under this entity, collect rents and run like a business.

I'm new here so take this with a grain...ANY help from the more experienced please?

Samson Kay · Answer

Well basically, I have a relative who has poor credit and no money. I have money, (not as much as I'd like) but if leveraging a first time home buyer, my funds could potentially fund acquisition of another quadplex.

The question becomes what would be required? My relative, who is a part time student, does not make a ton of money. But he's interested in getting into real estate. I figure this would be a good entry for him to make some cash flow, get management experience for no money down and live for free, and for me to get another line of passive cashflow for a small upfront investment. So I just wanted to see if this was even viable.

I am constantly on the prowl for strategies, which is why my posts are always about how to purchase real estate.

What kind of info do you need? I'm will

Bill Gulley · Answer

Oh, well, no, first time home buyer is an FHA program and usually tied into bond money at the state level. They will be qualifying with their credit. Classes are required in some cases and with those having poor credit. After they take the required some credit issues may become less important or of a concern.

You're really not providing much information as to the issues or goals or abilities, so can't really guess and advise. :)

Samson Kay · Answer

I wouldn't try to do anything fraudulent. I would fully disclose myself as an investor with interest in the potential for cashflow. I'm sure we set up a partnership agreement where I would provide the down payment, with the partner as the owner occupied. In return, I get 75% of the cashflow and equity.

Something like that? Just wanted to see if that were possible.

Bill Gulley · Answer

You can be on the note, but someone in title who doesn't reside in the home presents occupancy issues.

From you past threads sounds like you have credit and not the money and your partner has poor or no credit but has money.

Any way you cut it, LLC or acting personally both of you will be considered on a loan. If your partner is related you can receive a gift, you can borrow the funds in some cases so long as you disclose the loan. Funds in your account from more than 90 days, three months statements can be sufficient to show funds available for a purchase.

If both of you are to occupy the residence you can rely on your credit for the most part, unless the other party is barred from a loan due to bankruptcy or in some cases a criminal record, but if it's just poor credit they may go on title but not the note, this is with them in residence.

State laws as to homestead exemptions, being in title may be a concern trying to do it commercially or with non-owner occupants on title or on the loan.

It would really be best just to visit your lender, you might consider FHA. Talk to the loan officer and they can tell you which way they would facilitate the loan. :)

Vanessa Brown · Answer

You'd have to have their name on the deal since their the first timer. A residential loan would take both of you into consideration.

Has anyone ever leveraged someone else's first time home buyers status?

Most Popular Reply