All
Members
Companies
Blog
Forums
Podcast
Webinars
    User Log in  /  Sign up
  • Forums
    Newest Posts Trending Discussions Followed Forums Real Estate News & Current Events General Landlording & Rental Properties Buying & Selling Real Estate Deal Analysis See All
  • Education

    Read

    BiggerPockets Blog BPInsights: Expert Analysis Coronavirus Content & Resources Guides Glossary Reviews Member Blogs

    Watch

    Webinars Video Library Financial Independence Blueprint Intro to Real Estate: Rentals

    Listen

    BiggerPockets Real Estate Podcast BiggerPockets Money Podcast BiggerPockets Business Podcast Real Estate Rookie Podcast Daily Podcast (Audio Blog)

    Topics

    Business Operations Finance Finding Deals Property Management Property Types Strategy
  • Network

    Recommended Vendors

    Real Estate Agents Mortgage Lenders Companies Hard Money Lenders Contractors Investment Companies

    Search

    Members Events Jobs
  • Tools

    Calculators

    Rental Property Fix and Flip BRRRR Rehab Estimator
    Wholesaling Mortgage Payment 70% Rule Airbnb

    Services

    BPInsights: Property Insights Tenant Screening Property Management Lease Agreement Packages

    New Feature

    BPInsights (beta)

    Quickly analyze a property address or ZIP Code to compare your rent in your neighborhood.

    Analyze a property
  • Find Deals
    Real Estate Listings Find Foreclosures External Link Ads, Jobs, and Other
  • Bookstore

    Real Estate Books

    Profit Like The Pros Bidding to Buy See all books

    Featured Book

    BiggerPockets Wealth Magazine book cover
    BiggerPockets Wealth Magazine

    Written by financial journalists and data scientists, get 60+ pages of newsworthy content, expert-driven advice, and data-backed research written in a clear way to help you navigate your tough investment decisions in an ever-changing financial climate! Subscribe today and get the Oct/Nov issue delivered to your door!

    Get the Magazine
  • Pricing
Log In Sign up
User
Quick search links
Podcast Hard Money Lenders Books Washington
ForumsArrowPersonal Finance ForumArrowUnable to use a “gift” for down payment???
  • Newest Posts
    • Newest Posts
    • Unanswered Discussions
  • Trending
    • Top Discussions
    • Trending Discussions
  • Browse Forums
Search Nova
Topic: 1031 Exchanges Topic: Akron Real Estate Forum Topic: Alabama Real Estate Q&A Discussion Forum Topic: Alaska Real Estate Q&A Discussion Forum Topic: Alberta Real Estate Forum Topic: Albuquerque Topic: Allentown Real Estate Forum Topic: Anchorage Real Estate Forum Topic: Ann Arbor Topic: Arizona Real Estate Q&A Discussion Forum Topic: Arkansas Real Estate Q&A Discussion Forum Topic: Arlington Real Estate Forum Topic: Asheville NC Real Estate Forum Topic: Ask About A Real Estate Company Topic: Athens Real Estate Forum Topic: Atlanta Real Estate Forum Topic: Aurora Real Estate Forum Topic: Aurora Real Estate Forum Topic: Austin Real Estate Forum Topic: Bakersfield Real Estate Forum Topic: Baltimore Real Estate Forum Topic: Bankers, Lenders, and Mortgage Brokers Topic: Baton Rouge Real Estate Forum Topic: Beaverton Real Estate Forum Topic: BiggerPockets Business Podcast Topic: BiggerPockets Exclusive PRO Area Topic: BiggerPockets Money Podcast Topic: BiggerPockets Real Estate Investing Summit Topic: BiggerPockets Summer Reading List Topic: BiggerPockets Webinar Discussion Forum Topic: Billings Real Estate Forum Topic: Birmingham Real Estate Forum Topic: Bismarck Real Estate Forum Topic: Boise Real Estate Forum Topic: Boston Real Estate Forum Topic: Bridgeport Real Estate Forum Topic: British Columbia Real Estate Forum Topic: BRRRR - Buy, Rehab, Rent, Refinance, Repeat Topic: Buying & Selling Real Estate Discussion Topic: California Real Estate Q&A Discussion Forum Topic: Cambridge Real Estate Forum Topic: Canadian Real Estate Topic: Cape Cod Real Estate Forum Topic: Cape Coral Real Estate Forum Topic: Casper Real Estate Forum Topic: Cedar Rapids Real Estate Forum Topic: Chandler Real Estate Forum Topic: Charleston Real Estate Forum Topic: Charleston Real Estate Forum Topic: Charlotte Real Estate Forum Topic: Chattanooga Real Estate Forum Topic: Chesapeake Real Estate Forum Topic: Cheyenne Real Estate Forum Topic: Chicago Real Estate Forum Topic: Chittenden County Real Estate Forum Topic: Cincinnati Real Estate Forum Topic: Cleveland Real Estate Forum Topic: Coastal NC Real Estate Forum Topic: Colorado Real Estate Q&A Discussion Forum Topic: Colorado Springs Real Estate Forum Topic: Columbia Real Estate Forum Topic: Columbia Real Estate Forum Topic: Columbus Real Estate Forum Topic: Columbus Real Estate Forum Topic: Commercial Real Estate Investing Forum Topic: Completed Deal Diaries Topic: Connecticut Real Estate Q&A Discussion Forum Topic: Construction & Remodeling Diaries Topic: Contractors Topic: Conway Real Estate Forum Topic: Coronavirus Conversation Topic: Coronavirus Government Assistance Programs Topic: Creative Real Estate Financing Forum Topic: Currently Under Contract Topic: Dallas Real Estate Forum Topic: Davenport Real Estate Forum Topic: Dayton Real Estate Forum Topic: Delaware Real Estate Q&A Discussion Forum Topic: Denver Real Estate Forum Topic: Des Moines Real Estate Forum Topic: Detroit Real Estate Forum Topic: Do it Yourself Topic: El Paso Real Estate Forum Topic: Eugene Real Estate Forum Topic: Evansville Real Estate Forum Topic: FAQ Forum Topic: Fargo Topic: Fayetteville Real Estate Forum Topic: First Time Home Buyer Topic: Florida Real Estate Q&A Discussion Forum Topic: Foreigners Buying in the USA Topic: Fort Collins Real Estate Forum Topic: Fort Lauderdale Real Estate Forum Topic: Fort Smith Real Estate Forum Topic: Fort Wayne Real Estate Forum Topic: Fort Worth Real Estate Forum Topic: Fresno Real Estate Forum Topic: General Foreclosure & Pre-Foreclosure Forums Topic: General Landlording & Rental Properties Topic: General Real Estate Investing Topic: Georgia Real Estate Q&A Discussion Forum Topic: Germantown Real Estate Forum Topic: Get Foreclosure Help - Stop Foreclosure Forum Topic: Gilbert Real Estate Forum Topic: Glendale Real Estate Forum Topic: Goals, Business Plans & Entities Topic: Grand Rapids Real Estate Forum Topic: Green Bay Topic: Greensboro Real Estate Forum Topic: Hammond Real Estate Forum Topic: Hartford Real Estate Forum Topic: Hawaii Real Estate Q&A Discussion Forum Topic: Henderson Real Estate Forum Topic: Hialeah Real Estate Forum Topic: Hilo Real Estate Forum Topic: Home Owner Association (HOA) Issues & Problems Forum Topic: Honolulu Real Estate Forum Topic: Housing News & Real Estate Market Discussions Topic: Houston Real Estate Forum Topic: HUD, VA, and Tax Sales Topic: Huntington Real Estate Forum Topic: Huntsville Real Estate Forum Topic: Idaho Falls Real Estate Forum Topic: Idaho Real Estate Q&A Discussion Forum Topic: Illinois Real Estate Q&A Discussion Forum Topic: Indianapolis Real Estate Forum Topic: Indiana Real Estate Q&A Discussion Forum Topic: Innovative Strategies Topic: Interest Rate Drops Topic: International Real Estate Topic: Investor Deal Diaries Topic: Investor Psychology Topic: Iowa Real Estate Q&A Discussion Forum Topic: Jackson Real Estate Forum Topic: Jacksonville Real Estate Forum Topic: Jersey City Real Estate Forum Topic: Job Loss/Company Closings Topic: Joliet Real Estate Forum Topic: Jonesboro Real Estate Forum Topic: Kailua Real Estate Forum Topic: Kānèohe Real Estate Forum Topic: Kansas City Real Estate Forum Topic: Kansas City Real Estate Forum Topic: Kansas Real Estate Q&A Discussion Forum Topic: Kentucky Real Estate Q&A Discussion Forum Topic: Knoxville Real Estate Forum Topic: Lakewood Real Estate Forum Topic: Landlord Problem Solving Topic: Las Cruces Real Estate Forum Topic: Las Vegas Real Estate Forum Topic: Lewiston Real Estate Forum Topic: Lexington-Fayette Real Estate Forum Topic: Lincoln Real Estate Forum Topic: Little Rock Real Estate Forum Topic: Local Real Estate Networking Topic: Long Beach Real Estate Forum Topic: Long Island Real Estate Forum Topic: Los Angeles County Real Estate Forum Topic: Louisiana Real Estate Q&A Discussion Forum Topic: Louisville Real Estate Forum Topic: Madison Real Estate Forum Topic: Maine Real Estate Q&A Discussion Forum Topic: Managing Your Property Topic: Manchester Real Estate Forum Topic: Manitoba Topic: Marketing Your Rental Topic: Marketplace Topic: Maryland Real Estate Q&A Discussion Forum Topic: Massachusetts Real Estate Q&A Discussion Forum Topic: Meads Real Estate Forum Topic: Memphis Real Estate Forum Topic: Meridian Real Estate Forum Topic: Mesa Real Estate Forum Topic: Miami Topic: Michigan Real Estate Q&A Discussion Forum Topic: Military Investing Topic: Milwaukee Real Estate Forum Topic: Minneapolis Real Estate Forum Topic: Minnesota Real Estate Q&A Discussion Forum Topic: Mississippi Real Estate Q&A Discussion Forum Topic: Missoula Real Estate Forum Topic: Missouri Real Estate Q&A Discussion Forum Topic: Mobile (Alabama) Real Estate Forum Topic: Mobile Homes & Mobile Home Park Investing Topic: Modesto/Merced Real Estate Forum Topic: Montana Real Estate Q&A Discussion Forum Topic: Montgomery Real Estate Forum Topic: Mortgage Payment Suspension Topic: Mt. Pleasant Real Estate Forum Topic: Multi-Family and Apartment Investing Forums Topic: Nampa Real Estate Forum Topic: Naperville Real Estate Forum Topic: Nashville Real Estate Forum Topic: Nebraska Real Estate Q&A Discussion Forum Topic: Nevada Real Estate Q&A Discussion Forum Topic: Newark Real Estate Forum Topic: New Brunswick Real Estate Forum Topic: Newfoundland and Labrador Real Estate Forum Topic: New Hampshire Real Estate Q&A Discussion Forum Topic: New Haven Real Estate Forum Topic: New Jersey Real Estate Q&A Discussion Forum Topic: New Member Introductions Topic: New Mexico Real Estate Q&A Discussion Forum Topic: New Orleans Real Estate Forum Topic: New York City Real Estate Forum Topic: New York Real Estate Q&A Discussion Forum Topic: Norfolk Real Estate Forum Topic: North Carolina Real Estate Q&A Discussion Forum Topic: North Dakota Real Estate Q&A Discussion Forum Topic: Northwest Territories Real Estate Forum Topic: Norwalk Real Estate Forum Topic: Nova Scotia Real Estate Forum Topic: Nunavut Real Estate Forum Topic: Oakland Real Estate Forum Topic: Off-Topic Topic: Ogden Topic: Ohio Real Estate Q&A Discussion Forum Topic: Oklahoma City Real Estate Forum Topic: Oklahoma Real Estate Q&A Discussion Forum Topic: Omaha Real Estate Forum Topic: Ontario Real Estate Forum Topic: Orange County Real Estate Forum Topic: Oregon Real Estate Q&A Discussion Forum Topic: Orlando Real Estate Forum Topic: Overland Park Real Estate Forum Topic: Pearl City Real Estate Forum Topic: Pennsylvania Real Estate Q&A Discussion Forum Topic: Peoria Real Estate Forum Topic: Personal Finance Forum Topic: Philadelphia Real Estate Forum Topic: Phoenix Real Estate Forum Topic: Pittsburgh Real Estate Forum Topic: Pocatello Real Estate Forum Topic: Portland Real Estate Forum Topic: Portland Real Estate Forum Topic: Prince Edward Island Real Estate Forum Topic: Private Lending & Conventional Mortgage Advice Topic: Property Insurance Questions & Discussions Topic: Providence Real Estate Forum Topic: Provo Real Estate Forum Topic: Quad Cities Real Estate Forum Topic: Quebec Real Estate Forum Topic: Questions About BiggerPockets and Official Site Announcements Topic: Raleigh Real Estate Forum Topic: Rapid City Real Estate Forum Topic: Real Estate Agent Forums Topic: Real Estate Crowdfunding Forums Topic: Real Estate Deal Analysis and Advice Topic: Real Estate Development & New Home Construction Topic: Real Estate Events and Happenings Topic: Real Estate Guru, Book & Course Reviews and Discussions Topic: Real Estate Investor Marketing Help & Advice Topic: Real Estate News & Current Events Topic: Real Estate Not-So-Successful Stories Topic: Real Estate Quizzes Topic: Real Estate Rookie Podcast Topic: Real Estate Success Stories Topic: Real Estate Technology, Social Media & Blogging Topic: Real Estate Wholesaling Questions & Answers Topic: Rehabbing and House Flipping Topic: Reno Real Estate Forum Topic: Renters Discussion Topic: Rent to Own a.k.a. Lease Purchase, Lease Options Topic: REOs Topic: Rhode Island Real Estate Q&A Discussion Forum Topic: Richmond Real Estate Forum Topic: Rio Grande Valley Real Estate Forum Topic: Riverside Real Estate Forum Topic: Rochester Real Estate Forum Topic: Rockford Real Estate Forum Topic: Sacramento Real Estate Forum Topic: Saint Paul Real Estate Forum Topic: Salem Real Estate Forum Topic: Salt Lake City Real Estate Forum Topic: San Antonio Real Estate Forum Topic: San Diego Real Estate Forum Topic: Sandy Springs Real Estate Forum Topic: San Francisco Real Estate Forum Topic: San Jose Real Estate Forum Topic: San Luis Obispo Real Estate Forum Topic: Santa Fe Real Estate Forum Topic: Saskatchewan Real Estate Forum Topic: Savannah Real Estate Forum Topic: Scottsdale Real Estate Forum Topic: Seattle Real Estate Forum Topic: Short Sales Questions Topic: Short-Term and Vacation Rental Discussion Topic: Shreveport Real Estate Forum Topic: Sioux City Real Estate Forum Topic: Sioux Falls Real Estate Forum Topic: South Bend Real Estate Forum Topic: South Carolina Real Estate Q&A Discussion Forum Topic: South Dakota Real Estate Q&A Discussion Forum Topic: Southeast NC Real Estate Forum Topic: Spokane Real Estate Forum Topic: Springdale Real Estate Forum Topic: Springfield Real Estate Forum Topic: Stamford Real Estate Forum Topic: Starting Out Topic: St. Louis Real Estate Forum Topic: Stockton Real Estate Forum Topic: St. Petersburg Real Estate Forum Topic: STR Strategies Under Travel Restrictions Topic: Surprise Real Estate Forum Topic: Tacoma Real Estate Forum Topic: Tallahassee Real Estate Forum Topic: Tampa Real Estate Forum Topic: Tax, Legal Issues, Contracts, Self-Directed IRA Topic: Tax Liens, Notes, Paper, & Cash Flows Discussion Topic: Tempe Real Estate Forum Topic: Tenant Screening Topic: Tennessee Real Estate Q&A Discussion Forum Topic: Texas Real Estate Q&A Discussion Forum Topic: Thornton Real Estate Forum Topic: Toledo Real Estate Forum Topic: Topeka Real Estate Forum Topic: Tucson Real Estate Forum Topic: Tulsa Real Estate Forum Topic: Tuscaloosa Real Estate Forum Topic: Upstate New York Real Estate Forum Topic: Utah Real Estate Q&A Discussion Forum Topic: Vancouver Real Estate Forum Topic: Vermont Real Estate Q&A Discussion Forum Topic: Virginia Beach Real Estate Forum Topic: Virginia Real Estate Q&A Discussion Forum Topic: Waipahu Real Estate Forum Topic: Waipahu Real Estate Forum Topic: Warren Real Estate Forum Topic: Warwick Real Estate Forum Topic: Washington D.C. Real Estate Q&A Discussion Forum Topic: Washington Real Estate Q&A Discussion Forum Topic: Waterbury Real Estate Forum Topic: Westchester County Real Estate Forum Topic: Western NC Real Estate Forum Topic: West Gulfport Real Estate Forum Topic: West Virginia Real Estate Q&A Discussion Forum Topic: Wichita Real Estate Forum Topic: Wilkes Barre Scranton Real Estate Forum Topic: Wilmington Real Estate Forum Topic: Wisconsin Real Estate Q&A Discussion Forum Topic: Worcester Real Estate Forum Topic: Wyoming Real Estate Q&A Discussion Forum Topic: Yukon Real Estate Forum
Create post

Unable to use a “gift” for down payment???

13 Replies

  • Share on Facebook
  • Share on Twitter
  • Share on LinkedIn
Rotate Log in or sign up to reply
user profile avatar
  • Posts 12
  • Votes 2

Brandon Hayes
Rental Property Investor from Lighthouse Point, FL

posted about 1 year ago

Long story short. Found a great deal. Found a private lender to provide the 20% down to purchase the property. In the process of getting qualified for a conventional loan, was told I was unable to use a “gift” of 20% down from a friend or partner to use as a down payment. Now I know I’ve read a million times of investors using a lender to fund the down payment, then a hard money loan to fund a rehab if necessary.... and there’s got to be a better way then letting that money “season” in my account for 6 months to qualify. The lender would be out of his money for 6 months and the deal would surely be long gone...

What’s the best way to go about this? Have the lender get qualified and put the mortgage in his name, and the title in both our names? What if he wasn’t looking to be an equity partner but just wanted a percentage of return on the money he lent for the down payment? What if he had the money but not the credit? What strategy am I missing here? Thank you in advance for your time to respond!

Rotate Log in or sign up to reply
user profile avatar
Check Rosette Top Subjects:
Team, Maintenance, and Taxes & Accounting
  • Posts 985
  • Votes 367

Brent Paul
Rental Property Investor from Shakopee, MN

replied about 1 year ago

FHA I believe can have the downpayment from anyone. Conventional as far as I know can only be from family. I don't think it's going to be possible in that scenario.

You are best to get something in writing or you could get screwed. Personally I don't think I would go that route. He won't be able to get the loan if his credit is bad. However FHA is a little more lenient on credit. It sucks and I have been there. My only solution was to get a 2nd job which allowed me to get the downpayment I needed. Not ideal with kids, but I made it work.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 31
  • Votes 52

Joel Johnson
CFA from Sanibel, FL

replied about 1 year ago

Sounds to me like you need to find a new lender. I've not heard of anyone restricting gifts of down payments, so I would keep shopping. If it was pitched to the lender as a loan, that could be where you ran into an issue.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 12
  • Votes 2

Brandon Hayes
Rental Property Investor from Lighthouse Point, FL

replied about 1 year ago

@Joel Johnson @Brent Paul

Did some reading and you are correct. FHA allows family to gift a down payment. For example, you get married and your grandma gifts you $10k, you can use that towards a house. However, a underwriter can have questions on where the money came from and you'd be required to have that person fill out and sign a "gift letter". Conventional also allows family to contribute with a gift letter, but it's much less lenient. But it strongly states for an investment property, you can not use a gift as down payment.

I’m sure I can get more “creative” in my “creative financing”, but when someone is handing you money, and you can’t use it.... There’s got to be a loophole or something I’m missing.

I didn't pitch it as a loan and was very clear i had a partner that was helping fund the deal. Maybe you're right though, and I just got ahold of the wrong lender. I do have him pre-approving me for a FHA. Once my lease is up next October, I'll be buying a property for a live and flip. But would love to have a BRRRR under my belt before then.

If I can't use a gift, I'll just have to put in some extra work and save it myself. But I know there is a way to use "OPM" to get this deal done... Maybe I'll contact a HML and see if they'll fund it. It's a strong enough deal that I could refi and pay it back quickly...

I’ll keep researching and update this discussion when I find another answer.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 21K
  • Votes 12K

Wayne Brooks
Real Estate Professional from West Palm Beach, Florida

replied about 1 year ago

“Borrowing” the down payment is not going to work for fha or for conventional...period.  Also, few lenders will lend the down payment as a second mtg with no cash of your own in it.  You’ll need an equity partner, not a lender for a down payment.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 40
  • Votes 20

Robert Nelson

replied about 1 year ago

@Wayne Brooks

If you find a seller willing to work with you, they can contribute towards "closing costs" and you can just pay that much more for sales price. Not sure if lender will do it for investment property purchase, but I have done it with some buyers. Also, depending on the buyer's situation, FHA does have a down payment assistance program. Maybe you can move in the property as your primary residence for a period of time. That opens up more options, too.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 21K
  • Votes 12K

Wayne Brooks
Real Estate Professional from West Palm Beach, Florida

replied about 1 year ago

@Robert Nelson Yes, having the seller pay closing closing costs, up to 6% fha and 3% conventional is perfectly fine.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 12
  • Votes 2

Brandon Hayes
Rental Property Investor from Lighthouse Point, FL

replied about 1 year ago

@Wayne Brooks @Robert Nelson

Great info guys. Thank you. 
So let’s say I pitch the idea of an equity partnership. From what I’ve read, that type of partnership would be structured as such. My partner puts down the cash for the down payment and closing costs, and I take out the mortgage and do the work. Then cash flow and equity is split 50/50 or whatever other terms you decide. How does this work then? The partners down payment isn’t considered a gift at that point? Would the lender just need his bank statement then too so he can also be held accountable if the lender needed to go after someone to get his money back? 

Rotate Log in or sign up to reply
user profile avatar
Check Rosette Top Subjects:
Analyze Deals, Taxes & Accounting, and Maintenance
  • Posts 2.7K
  • Votes 1.8K

Mike McCarthy
Investor from Philadelphia, Pennsylvania

replied about 1 year ago

I don’t know what the Fannie/Freddie rules are, but banks always ask for 2 months of bank statements. So as long as that ‘gift’ has sit in your bank account for two months, it no longer looks like a gift.

(Not recommending you do anything against your bank/mortgage guidelines, but I know that works for some who do get money from family).

If it’s a loan and reported to credit agencies, remember the debt will show up on your credit report - which might not be a bad thing either.

Rotate Log in or sign up to reply
user profile avatar
Check Rosette Top Subjects:
Rentals, Real Estate Finance, and Team
  • Posts 100
  • Votes 68

Kata Walters
Rental Property Investor from New York

replied about 1 year ago

@Brandon Hayes Hi Brandon, I used a private lender ( family member) for a 18k down payment actually wasn't conventional now I realize but it's definitely easier using investment purchase loans etc and OPM. Some great advice on this thread. 

Rotate Log in or sign up to reply
user profile avatar
  • Posts 12
  • Votes 2

Brandon Hayes
Rental Property Investor from Lighthouse Point, FL

replied about 1 year ago

@Kata Walters

Great info! Thank you!

Rotate Log in or sign up to reply
user profile avatar
  • Posts 12
  • Votes 2

Brandon Hayes
Rental Property Investor from Lighthouse Point, FL

replied about 1 year ago

I had to revisit the "partnerships" chapter in Brandon Turner's "No (and low) Money Down" book to find the info I needed. If your partner is paying for the ENTIRE purchase of the house, it can be done and you can decide on the specific terms of the deal, whether it's an equity partnership, or a fixed rate of return partnership, or if you bring in a hard money lender to fund the ENTIRE purchase, you can bring in a partner only for their credit if yours happens to be poor, so you can qualify for the refi after the rehab and pay off the HML.

    BUT, the only way I’ve found to pull off a partnership where the partner isn’t providing enough to fund the entire purchase, but only the down payment, the mortgage must be in his name. So he’d be the one getting prequalified and therefore it’s his money in his account and not a gift as it would be if he gave me the down payment, and then I tried to get prequalified. 

    I hope I’m not breaking any rules posting part of Brandon’s book for other to see here, but it is a free e-book for pros so I don’t think it can hurt. 

    “Brian, a relatively new investor, located a triplex in his neighborhood listed at $120,000. He knows the property will make an excellent rental but has no cash to purchase the property. Brian knows he needs a 25% down payment plus about $10,000 to cover minor repairs and closing costs to make the deal come together.
Thinking creatively, Brian talks with Samantha, his aunt, who has been interested in investing in real estate for some time but has been too busy with her day job to jump in. Samantha agrees to pay the $40,000 needed to purchase the triplex and gets the loan for the property in her name, but both Brian and Samantha put their names on the property’s title. They obtain a mortgage for $90,000, and all the monthly expenses (mortgage, utilities, management, vacancy, capital expenditures, repairs, etc.) come to $1,400 per month. The triplex is rented for $2,400 per month, so each month, the two make around $1,000 in positive cash flow, which they split 50/50.
Someday, when they sell, they’ll split the proceeds 50/50 as well and trade up to a larger deal together. Brian was able to generate $500 per month using no money of his own, just creativity.“

Rotate Log in or sign up to reply
user profile avatar
  • Posts 14
  • Votes 3

Jeff Grana
Real Estate Broker from Falls Church, VA

replied about 1 year ago

@Joel Johnson I have an FHA, got the down payment from my parents. It seasoned in my account for a year and a half, and they still required proof of the transaction from my parents' bank before they could release it. Have you seen something like that before?

Rotate Log in or sign up to reply
user profile avatar
  • Posts 31
  • Votes 52

Joel Johnson
CFA from Sanibel, FL

replied about 1 year ago
Originally posted by @Jeff Grana :

@Joel Johnson I have an FHA, got the down payment from my parents. It seasoned in my account for a year and a half, and they still required proof of the transaction from my parents' bank before they could release it. Have you seen something like that before?

Jeff, I haven't. Especially for FHA, can't imagine what they would've been worrying about. Unless the downpayment amount didn't quite match age and income.

Rotate Log in or sign up to reply
  • 1
Related Resources Personal Finance Forum
Will Americans’ Personal Finances Survive the Pandemic?
9 Ways to Save Money You Have Probably Never Tried
8 Ways to Maximize Your 2020 Tax Benefits as a Real Estate Investor
How Much Should You Save for Retirement?
If 2020 Taught Us Anything About Money, It’s the Importance of THIS
Resources Read, see, and learn more!
Link Real Estate Investment Calculators
Link BiggerPockets Blog
Link Path to Purchase
Link Mortgage Loans
Link Find a Contractor
Link Real Estate Agents
Link Hard Money Lenders
Link Real Estate Listings

Top Contributors

John Perrings
John Perrings
Oakland, CA
9.29
Score
Thomas Rutkowski
Thomas Rutkowski
Boynton Beach, FL
6.57
Score
Ravi Ramphal
Ravi Ramphal
4.14
Score
Russell R.
Russell R.
Mt Kisco, NY
4.14
Score
Jason Wray
Jason Wray
Nationwide (Florida)
4.0
Score
Log in Sign up

Log in

Forgot password?

If you signed up for BiggerPockets via Facebook, you can log in with just one click!

Log in with Facebook

Or
btn_google_dark_normal_ios Created with Sketch. Continue with Google

Let's get started

We just need a few details to get you set up and ready to go!

Use your real name

Use at least 8 characters. Using a phrase of random words (like: paper Dog team blue) is secure and easy to remember.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.

Or
btn_google_dark_normal_ios Created with Sketch. Continue with Google

Why create an account?

Receive a free digital download of The Ultimate Beginner's Guide to Real Estate Investing.

Connect with 1,000,000+ real estate investors!

Find local real estate meetups and events in your area.

Start analyzing real estate properties, we do the math for you.

It's free!

Explore

  • Membership
  • Community
  • Education
  • Marketplace
  • Tools
  • FilePlace
  • REI Resources
  • Perks
  • Glossary
  • Reviews
  • iOS App
  • Android App

Company

  • About Us
  • Press
  • Advertising
  • Careers
  • Stats
  • Contact Us

Important

  • Editorial Guidelines
  • Terms of Use
  • Rules
  • Privacy
  • FAQ

Social

  • Facebook
  • Twitter
  • YouTube
  • Instagram
© 2004-2021 BiggerPockets, LLC. All Rights Reserved.