House hacking with Brother in law

Member since 2023 · 1 post · 2 votes

Hi everyone, I'm new here and just had an opportunity present itself.

This would be my first real estate investment...my brother in law is moving to Colorado for work for the next 1-3 years and does not want to rent any longer. I am thinking of potentially co signing with him on a duplex where he lives in one side (house hack) and we rent other the other.

I could cover more of the down payment while he pays full market rent or close to, depending on how much we rent the other side for.

Am I thinking of this wrong and it's not a good idea? There's not a way for me to house hack myself because of family situation so I believe it's a way for me to house hack indirectly

Please give me all your thoughts! Thank you

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Arman AhmedPro Member
Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 924 votes
2mo
Quote from @Garrett Nickelson:

Hi everyone, I'm new here and just had an opportunity present itself.

This would be my first real estate investment...my brother in law is moving to Colorado for work for the next 1-3 years and does not want to rent any longer. I am thinking of potentially co signing with him on a duplex where he lives in one side (house hack) and we rent other the other.

I could cover more of the down payment while he pays full market rent or close to, depending on how much we rent the other side for.

Am I thinking of this wrong and it's not a good idea? There's not a way for me to house hack myself because of family situation so I believe it's a way for me to house hack indirectly

Please give me all your thoughts! Thank you

It can work, but I'd treat it like a business first and family second. Make sure you have a written agreement covering ownership percentages, who pays for repairs, what happens if one of you wants to sell, and what happens when your brother-in-law moves in a few years. If the numbers still make sense with those scenarios, it could be a great way to get your first investment without living there yourself. Clear expectations upfront can save a lot of headaches later.

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Andrew PostellPro Member
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
2mo
@Garrett Nickelson love the idea! Not sure what you meant about your "family situation" but I'm assuming it means you could cover the downpayment and he could qualify for the mortgage? But, in either case, get into real estate any way that you can. I would still encourage you to have a formal lease here. Up to you if you want to do a full background check, etc. but make sure you have a lease. The lease not only protects you but also tells him what things he is responsible for (and what you are responsible for). So, have it in writing so there's no confusion. Hope it works out!
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Jules Aton
MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
2mo
Sorry to rain on the parade but it sounds like a terrible idea to me despite having a good relationship with both my family and inlaws. I see these type ideas, similar to turnkey rentals as something inexperienced investors think will make it easier on them and tend to either cost money or cause headaches-sometimes both. There are so many things that could go wrong most notably that he will be moving to a new area and that often doesn't go as planned as well as how long do you think he will want to pay market rent on a property that he is a part owner in? You have 1-3 years, find a way to make this purchase solo, rent both sides to strangers or buy it and have him rent one side from you and it becomes a solid plan.
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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
2mo
You will need a fantastic Operating Agreement for the LLC that owns the property!
Most important is how will you to split when your goals diverge?
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Ryan SpathBusiness Member
Real Estate Agent · Boise, ID · Member since 2017 · 565 posts · 377 votes
2mo
Quote from @Garrett Nickelson:

Hi everyone, I'm new here and just had an opportunity present itself.

This would be my first real estate investment...my brother in law is moving to Colorado for work for the next 1-3 years and does not want to rent any longer. I am thinking of potentially co signing with him on a duplex where he lives in one side (house hack) and we rent other the other.

I could cover more of the down payment while he pays full market rent or close to, depending on how much we rent the other side for.

Am I thinking of this wrong and it's not a good idea? There's not a way for me to house hack myself because of family situation so I believe it's a way for me to house hack indirectly

Please give me all your thoughts! Thank you

Garrett, on paper this sounds like an amazing opportunity…the one thing I will say, begin with the end in mind! Think of all the what ifs, and have an agreement in place that outlines everything……Holding period, who is responsible for what, just to name a couple. Bonus if your brother n law can get an FHA loan and you can acquire a property with 3.5% down. Be sure to underwrite this so it cash flows when he moves out. Feel free to send me a DM with your email and ill share my excel sheet that helps me analyze deals….

[email protected]208-600-2814
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Max Ferguson
Real Estate Broker · Denver/Castle Pines/Colorado Springs, CO · Member since 2021 · 248 posts · 136 votes
2mo
I did something similar for my first househack in Colorado Springs. Like others have said, a drawn out operating agreement is a must. They come in handy even with Family even if there are no disagreements there are items like taxes, depreciation, etc... that should be drawn out and discussed before.
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Van Tovault
Homeowner · Member since 2026 · 3 posts · 3 votes
2mo
There's a loan mechanic that may apply to this plan that I don't think anybody has flagged yet, so I'll mention it. My understanding is that if you co-sign without living there, you are what FHA calls a non-occupying co-borrower, and on a 2-4 unit property those loans are capped at 75% loan-to-value. The low-down-payment path (3.5% FHA, or 5% conventional owner-occupied) generally only survives if your brother-in-law qualifies on his own. So before structuring anything, have a lender run him solo. If he qualifies alone, the cleanest version of this whole idea is: it's his loan and his house hack, and whatever help you give happens outside the mortgage, done by the book (gift funds have rules if it's really an investment, don't paper it as a gift).

If he can't qualify alone and you co-sign, you're looking at roughly 25% down anyway, at which point compare it against just buying the duplex yourself as a straight rental and leasing one side to him at market rent. Same money down, much simpler ownership, and no conversation in year two about why a part-owner is paying full rent. One tax note from the numbers side: renting to family is fine as long as it's their primary residence at a fair market rate (go below market and the IRS starts treating those as personal-use days and your deductions shrink). Not tax advice, confirm with a CPA.

The 1-3 year window is the other thing I'd respect. Selling costs eat most of the equity a duplex builds in three years, so whichever structure you pick, make sure it works as a keeper after he moves out, not just while he's there.
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Ashish AcharyaBusiness Member
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
2mo
@Garrett Nickelson,
This works, but it's not really "indirect house hacking" for you tax-wise, you'd just be a co-owner (or partnership that requires separate tax filling) where someone else lives in one unit and pays rent, not you living there yourself. That means no Section 121 exclusion down the road on your side, and no personal-use portion either, the whole thing is investment property from your end regardless of the ownership split.

The big thing to nail down before you co-sign: how ownership, income, and expenses get split needs to be documented clearly, especially with your brother-in-law living in one unit while you don't. His rent has to actually be treated as real rental income split by ownership percentage, not just money passed between family members, otherwise the IRS could question whether it's a genuine rental arrangement at all. And if your down payment contribution isn't 50/50, your ownership percentage should match that, not just an assumption, or it creates headaches with basis and gain splitting later.

Since he's only there 1-3 years, also worth locking in the exit plan now, what happens to his equity, how a sale gets divided, before you close rather than figuring it out later. Get a CPA (and maybe an attorney) to look at the co-ownership structure first. Happy to connect!
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Tanner PileBusiness Member
Real Estate Broker · Colorado Springs, CO · Member since 2019 · 388 posts · 326 votes
2mo
@Garrett Nickelson
This is a great idea and will work well. You may have a few hoops to jump through on the lending side if you're not living in the property with him but it still possible. You will want to speak with a lender on how to structure it to get loan approval.
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Rick Albert
Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
2mo
The challenge is setting expectations. Having ground rules, who is responsible for what, etc. is important.
You could structure this as debt if you have concern. Meaning you provide the down payment but he pays you back up to a certain point. This way you move on and doesn't hurt the relationship.
It could also be tricky because he is living there. Now the dynamics of what property to buy changes. Is it based on the numbers or HIS lifestyle choices? Those could be two different things and you could just be funding his best life.
Another alternative is you buy the property and he does a rent to own structure. You now have an exit and some cash flow in the meantime.
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Minho Lee
Real Estate Agent · Worcester, MA · Member since 2026 · 114 posts · 53 votes
2mo
I don’t think you’re thinking about this wrong, but I do think this is one of those situations where the structure matters more than the idea itself.

On paper, it can work. You’re helping fund a deal, he’s house hacking, and the rental unit offsets expenses. That part makes sense.

Where things can get tricky is the relationship + expectations. You’re mixing family and business, so I’d make sure everything is very clearly defined upfront. Things like who owns what percentage, who’s responsible for repairs, what happens if he moves out earlier than expected, or if one of you wants to sell.

Also, if you’re co-signing, understand you’re fully responsible for the loan if anything goes wrong. Even if he’s paying “rent,” the lender still sees both of you on the hook.

I’d also run the numbers as if things don’t go perfectly. What if the other unit is vacant? What if rents are lower than expected? Does the deal still make sense?

It can be a solid opportunity if it’s structured right, but I’d treat it like a business deal first and make sure everything is in writing before moving forward.
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