Helping our daughter get a start in real estate investing

[Amy Martin]

Dear BiggerPockets Community,

I am new to BiggerPockets here but would like to ask for some needed advice.  Our daughter was recently laid off and is struggling to find work. My husband and I thought we could help her out somehow through our real estate holdings. We are retired and living off the income of four different rental properties which she helps us manage. She has saved up some money and wants to purchase a rental property herself so she can be in a less financially precarious position. She is an actress, but since that job does not have stable work (especially not during this pandemic) it's difficult for her to get a mortgage. Her goal is to get enough rental income to be able to continue acting and not worry about paying the bills every month.

What are some ways we can help her obtain an income using the rental properties we own so that she can qualify for a mortgage and start down the path of purchasing and managing rental investments for herself?

Some ideas we brainstormed:

-Hire her as a property manager and pay her to manage our properties (though we only have four total). She has been managing our properties for years so we're not against officially hiring her for helping us.

-Transfer ownership of one of our rental properties to her so she can add it as her own income. She will be inheriting our properties eventually (though that will be MUCH later), so this would give her an early start.

-Lease a property to her, and then let her do Airbnb to make money (though in this environment it seems Airbnb is not doing well).

Any suggestions/advice on this matter would be much appreciated.

Thank you BiggerPockets community.

Sincerely,

Amy Martin

[Ujwal Velagapudi]

Amy if the goal is to show an income so that banks would lend to her, then I think the easiest option would be to hire her as your property manager. At whatever amount you all decide, it will show a consistent paycheck. It will differ based on the lender, but some actually want to see the income actually shown in your tax returns and not a paystub/job offer from the current year. I had this happen to me when I first graduated college, I couldn't substantiate my job offer until I filed my taxes the following year, so the bank just took into account my min. wage jobs from college and a portion of what my paystubs showed. 

This will come more on the acquisition side, but you could allow her to leverage your current equity in the properties in some form so that she can make her couple of purchases. This can be through a HELOC, refinancing, or if one of your properties are paid off then you can put it up as collateral.

You could also help co-guarantee the loan, which will put a lot of lenders at ease. 

She could also help grow your business leveraging what you have already built, and adding her value to it with her savings and more importantly her time. She could make purchases on behalf of you/your company, making it easier since I'm assuming there are years of stable Schedule E's filed, leverage your personal finances, etc. If you don't have each property set up as a business, you could just create a holding company that owns all 4 properties, and give your daughter minority ownership. This could incentive her to grow this business, be an equity owner, build her real estate credibility to future lenders, grow her personal finances, and even help her parents out with growing their portfolio together as a family.