Has anyone ever partnered with someone who wants to house hack and live in one unit of a MFH?
I have an opportunity to buy a triplex off market in a hot area just outside of Pittsburgh. I have a friend who's been looking for an apartment in this exact area who is willing to put the loan in his name to take advantage of the FHA loan as it would be owner occupied. Could this work for a partnership? How would you set it up to be beneficial for both of us - he lives free? I collect remaining cash flow? I pay up front cash costs like down payment and closing and such?
Feel like this is a great opportunity to get my first MFH with very little of my own money into the deal and not taking on the loan. Any help (what kind of partnership, can this even work, who gets what money etc.) is greatly appreciated! I would be handling all landlord activities and he would just be living for free/cheap and have a stake in the house value itself.
@Scott Gordon , I have not partnered a house hack. Typically, from my previous house hacks, what I read here, and when I look at smaller multi's, there is a good chance the numbers won't work to provide you any profit. You may have a great deal on your hands that could work in this situation.
On to a partnership, and this is completely contingent on the numbers, but it sounds like you are being very generous in the cut to offer free rent, but that is an incentive for him, if the returns still make you happy. A couple notes of caution:
- what happens when you want to sell, or he wants to sell? You have all the money in it, but it is in his name. Or he wants to move and can't qualify for a new mortgage with this one still in his name, but you might not have the money to buy him out.
- who is covering the mortgage payments each month? If you need both units rented to make money, and one unit is sitting vacant, who is responsible for payment? Ultimately your "free rent" friend is, since it is his name and credit on mortgage, but you are supposed to be paying it and can't.
- Same scenario as above, but the furnace goes out, roof, appliances, etc. Who is footing the bill?
None of these are meant to imply you can't do it, but I see a lot of risk that needs to be addressed ahead of time, to protect you from losing your investment that is in someone else's name. And for him from risking his credit to help you achieve your desire to get into multifamily.