Help financing my first deal as a college student

[Camron Cottam]

I am in a little bit of a puzzle and not sure how to put the pieces together, but I'm sure there's got to be a way to make buying my first deal work.

My situation is that I'm currently a college student. I wait tables and work construction on the side in which I get paid under the table. In other words, I don't make a lot on paper. BUT I have a person who is potentially willing to put up around 10-20k. Also if I wrote out a business plan and showed my parents numbers that work, I feel like I just may be able convince them to loan me some money as well. 

About a month ago I saw a property I liked, which in my area was a nice duplex for about 150K, so I went and tried to get pre-approved for a loan, knowing that I would probably wouldn't get approved but wanted to see how the process went. Long story short the guy I spoke with said I was a little ways away from getting approved. I didn't make enough money on paper. 

My thoughts on the whole situation is that even if I can make it work it is a risky situation using someone else's money on my first deal. With that being said the go getter in me wants to make this work one way or another. I know that this is what I want to do and I'm tired of paying someone else on the first of the month. 

So I guess my questions would be:

How do I get approved for a loan (FHA) with my situation?

If I find the right property is it realistic to be able to give a return on investment to my friend/business partner and my parents? 

[James Masotti]

@Camron Cottam - You're heading down the right path just need some adjustment. Rather than trying to qualify for the property on your own you need to partner with your parents. Purchase it with 20% down ($30k in this situation) and get a traditional investment/2nd home loan from a lender. This way you're able to utilize your parents W2 income and credit score to help you qualify. The agreement you have with them should be something like they get all the equity and 50% of the cashflow where you get the other 50% of the cashflow plus a property management fee (assuming you're not living there). If you're living there than the deal is you get to live rent free while at college and will manage and maintain the other unit while you're there. In this regard you build experience and cash. All of your money from waiting tables, construction, and cashflow can go in the bank to save up as a downpayment toward the next property.

Bringing on  your other friend would complicate things and add significant risk to your friendship. Parents are usually much more forgiving if you screw something up. Once you have the confidence you know what you're doing after a few deals then maybe you can borrow money from a friend...but you better be prepared to pay a solid interest rate (8-12%) to that friend 

Hope that helps provide some additional perspective and thoughts to consider