Investor · Tucson AZ · Member since 2019 · 31 posts · 37 votes
I am helping a friend with his first FHA house hack. This will be his first real estate purchase. I've shared a lot of knowledge with him and introduced him to my real estate agent and lender. He has been looking for a place to house hack. I found a 4plex for him that I think he could live for free with. The 4plex does need a little work and the rents are under market value. He will most likely need to find new tenants for 3 of the units to get the rent to make the house hack work. I have a lot of experience in rental management and finding good tenants and told him if he wants we could work out a partnership. He was very interested and I think it could be a beneficial for him and I. What would the structure of a partnership look like in your opinion? I will not be contributing any money, just managing the units, finding tenants, helping with renovations, providing contacts like contractor, lender, etc. Basically ill be his guide through the whole process.
Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
5y
Hey @Sam Ohanesian, that's great that your buddy has a knowledgeable guide to walk them through this process. It's a bummer that the agent doesn't have this capacity or skill set.
What you're describing is property management, and the keys to being able to legally manage the property for them would be:
You are a licensed real estate broker
You are a direct employee of the owner
You are an owner
A few other obscure exemptions.
The sticky wicket here lies in the FHA part. As a house-hack the lender is making the loan to your buddy personally, so splitting ownership to give you beneficial interest doesn't work smoothly here. Assuming you are not a real estate broker, then that really leaves the employment idea. Perhaps there is a play in which you can function as a service provider (NOT a property manager) and pass the management activities through a property manager that you know/like/trust. Otherwise maybe you can collect a consulting fee for walking your buddy through the steps that THEY will need to do in order to manage the property (still guidance, still earning, but NOT managing the property).
That's all I've got. Good luck with it, and I look forward to hearing how it all shakes out!