Co-signing a mortgage while retaining buying power possible?

7 Replies

Hi everyone, I have a question which I would appreciate some input on. I've been studying real estate for awhile now and am getting close to being ready for my first deal. (House-hack) The main reason I'm getting into real estate is not only financial freedom for myself but to get my parents retired. They are in their 60's with no pensions, retirement plans, or property. I'm planning on helping them to purchase a home soon, possibly using my credit to do so unless we can find an owner finance or similar situation. My question is this: is there a way I could use my credit to help them buy a home while preserving my buying power for future deals that I want to do on my own? I've heard talk of possibly being a lien holder and basically have them pay me rent which would just go to the mortgage. How could I best structure this type of arrangement? Thanks all in advance, Jon

If your parents aren't retired, why would you need to hold a mortgage for them? I think you are on the right track in your last sentence- why not buy a house and rent it to them. Of course, there are all kinds of family dynamics to take in to account, but that is a risk only you can assess. 

Hey Corbe, Thanks for the input. I should've put into the original post that they have zero or poor credit. My dad is currently building his score back up quickly but there will not be much history, most likely I will need to lend my credit to help them buy.

Hi @Jonathan Vandal ,

Cashflow positive rental properties help your debt to income ratio, they do not hurt it. They do increase the reserve requirements, of course. Path forward might to be to handcuff your parents to ONLY properties that will cashflow as a rental, and have them pay fair market rent.

Hey @Jonathan Vandal , are you confident that they have the means and fortitude to pay you rent if you were to rent to them? Doing it because you care about them and want to help is great, but if you can't afford both mortgages at the same time it could be a problem financially and personally. 

So it seems I can't have my cake and eat it too. They want to own the place, not rent. I want to make that happen while still being able to purchase another deal in the future. So it seems one or the other has to be sacrificed.
Originally posted by @Jonathan Vandal :
So it seems I can't have my cake and eat it too. They want to own the place, not rent. I want to make that happen while still being able to purchase another deal in the future. So it seems one or the other has to be sacrificed.

 If they really do have FICOs in the 500-550 range, there are still options out there for them, but the rates/terms will be ugly. 

I believe my dad's is around 630 right now, thanks to some credit rebuilding. But he has not had any type of credit accounts or loans for several years. I'm hoping he can get a loan on his own, and I will help with just down payment if necessary.

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