Using Mother-In-Law's Primary Residence to obtain HELOC to invest

[Gabriel Diaz]

My wife and I (25F & 27M) are working towards financial freedom by investing in real estate. As we have been saving up cash of our own to invest in real estate, we came across an opportunity to utilize her moms primary residence to pull a HELOC to invest (possibly 80 - 100k). We pitched the idea to her mom and she loved the idea. It turned out her mom didn't have a good enough Debt-to-Income to touch her homes equity. Additionally, we noticed that her mom doesn't have retirement savings. Therefore, investing in real estate can be a good way for her to begin her savings and be able to tap into emergency funding.

As everyone agreed to this win-win situation, I am trying to take the next steps forward in mitigating as much risk/challenges after obtaining the heloc. The tough part is that, it is her homes equity that we are tapping into and my name that we're putting the heloc under. Therefore, what are some challenges we may face utilizing this method for real estate investing? and what actions should we take to mitigate as much as possible?

Two things my wife and I took into consideration so far is;

1. 1. All parties should come to an agreement that the HELOC money can ONLY be used for real estate investing and possible emergency funds (if necessary).
2. 2. The roles and responsibilities that everyone has when it comes to the investing in real estate part. E.G - My wife and I are specifically looking to do the BRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy and would love to gather her moms feedback without overshadowing the strategy.