First Time Investor Financing?

[Joseph Cornwell]

Hello Everyone!

This is my first post on BP and I am hoping to get a question answered or perhaps some advice on a potential scenario. My backstory to this scenario, being that I have some capital for a down payment on my first investment property. My goal is to buy and hold a rental property. I live in South West Ohio near Cincinnati. The issue is that after talking to several lenders in my area they all want 20-25% down on any mortgage for any property that will not be my primary residence. My wife and I just bought a new home last year and there is no way for me personally to house hack or live in a single family or multi family property. This leads me to a potential solution:

I have a person that I trust who is looking to move from an apartment to a house for the next 12-24 months. I am considering buying a property with a conventional loan, with both of our names on the mortgage. Then drafting a contract/lease agreement, that would basically spell out that they would agree to live in this property for X amount of months, (long enough to satisfy any residency requirements for a traditional loan by a lender). They would pay the mortgage/utilities, maintain the property such as grass cutting, etc. Similar to any single family tenant, in return after this X amount of months I would refinance the mortgage into my name only, and rent this property out to a new tenant. Hopefully provided a win-win scenario, during this time they would further build their credit history with a mortgage, I can rehab the property as needed to build more equity, and the expenses would be paid during this time frame. 

If anyone has any advice, or has done anything similar and would like to share their opinion, I would greatly appreciate it. Also if anyone knows the exact amount of months for a conventional loan to meet the residency requirement?