Private Lender in House Hacking

2 Replies

My name is Jamin Hochstetler and I am 23 years old. I graduated last year with a degree in Mechanical Engineering and have a full time job. I am a new buy and hold investor in northern Indiana. 2 months ago I purchased my first property - a duplex, and I used a conventional loan with 20% down. I am now looking to get another multifamily property to house hack. My friend is also interested in getting his feet wet in real estate investing and said he would be interested in going in with me if I found one. Combined we don't have the funds to purchase anything upfront, so financing would be required. My question is: how would that work? In order for him to help fund, would his name have to be on the loan too? And how would his repayment work? Would he have a % stake in the equity or would he just get repaid from his % of the cash flow? Thank you!

Listening to BP Podcast episode 289 should help.

If you give hime equity then the two of you would be subject to SEC regulations.

However, if he simply lends you the money, then the two of you can agree upon terms that you are both happy with. Because you would technically be adversaries on this deal then the SEC would not be involved. 

Also remember that if you are willing to live in this next multi-family ( and it id a 4-plex or less) than you only need as low as 3% down to get it. 

Thanks! I didn't know that about the SEC regulations. The one question I have is if he lends me the money, how will the bank look at that? I know I can be gifted the funds, but if I'm given the funds and expected to pay it back does that change things in their eyes?