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Updated over 4 years ago,
House Hacking w/ Friend
Hello BP House Hackers!
I have been reading blogs and listening to podcasts about house hacking and I am extremely interested in the whole idea. One issue, my wife and I have no desire to live in a house hack ourselves. However, one of my close friends is single and is interested in purchasing his first house and likes the idea of a house hack. His available capital is low and knowledge of real estate investing is little to none. So I had the idea that I could invest with him in his house hack. Has anyone else attempted to do this?
My idea would be that he qualifies for the 203k FHA loan and would live in the house for at least a year. I would put up most of the capital at 3.5% and would help him with landlording and rehabbing etc. We would split everything after initial down payment. Assuming we are able to have tenants cover the mortgage and still have some additional cash flow, we would split the additional cash flow. He would pay me his additional cash flow until our capital contributions in the property were equal and then he could do what he wills with his additional capital and we would maintain our even 50/50 split in the property. Once a year is up, rinse and repeat until we have a few properties, picking up equity and cash flow as we go along.
Is there anything I am overlooking as to why this wouldn’t work? My credit history is strong and I am assuming I would be able to add that to his credit profile in the financing process, right? Anything else I am missing?