Refinance and quit claim deed

[Andrew J.]

Greetings BP,

As I continue to learn everyday about RE investing...a new scenario always seems to pop up. I will do my best to explain this scenario related to the purchase, rehab, and refinance of a property I am pursuing.

Purchasers A, B, and C are partnering to purchase and rehab a duplex (purchase price and rehab not to exceed $90,000 with e rehabilitation loan)

Application breezed past initial underwriting as all partners have above 750 credit, stable income, low debt to income, etc. It was sent to a second underwriter due to the fact that between the three partners, this purchase would exceed the 4 property limit (A & B have 3 properties, C has 1) The second underwriter wouldn't give a loan commitment due to this circumstance. They did make a proposal however:

Partners A & B move forward with the financing of the property, keeping partner C's name off of the loan docs, therefore not exceeding the 4 property rule. At close, partner C's name would be included on the title.

To move the property into sole ownership of partner A, once rehab was complete the partners could refinance the property under partner C's name, while A & B could write a quit claim giving A ownership.

This is a new one to me and while my experience in the past has primarily been in rehabbing; I am finding more and more everyday about RE investing. The numbers work on the property, and the ARV for this buy and hold duplex would be a very conservative $120,000 based on comps. Cashflow would be ~400/mo, right in between the 1-2% rule.

Any advice or suggestions would be helpful, and I can provide anyone more information if needed.

Thanks BP!