Would you approve this deal?

2 Replies

Home currently for sale at 180,000 buyer (not me, acquaintance) is first time home buyer and hopes to get FHA for 3.5%. Plans to rent other 3 bedrooms out to college roommates. Needs me for the down payment and closing cost ($10-$12,000 cash). He will provide me guarantee of 30% cash on cash return annually until whenever he sells it in the future.

He thinks he can buy home for $175,000 FYI

So what do you think? What would you change? How can I guarantee I get paid?


@Richard Miller Even if you loan the money and require a 30% return on your money, you won’t be able to use the property as collateral since the bank will require it for the FHA loan. If you’re putting the down payment, I would recommend purchasing the house yourself and renting it to the 4 individuals (if the deal makes sense for you). As is, there’s not much you can fall back on if you fail to receive the 30%.