Considering: Buying the kid a college rental house

[Brian Kelley]

Hello BP!  I'm getting back in the game after being away for a while and part of my timing is the kids are leaving the nest.  One of them is planning to attend WSU in Pullman WA which is a little college town surrounded by a few million square miles of summer wheat...

Room and board is almost as big an expense as tuition and it always made sense to me to consider purchasing a house for the student to live in for a period of years while renting out extra rooms to classmates.  I know students are not always the most gentle tenants but let's assume for a minute that they don't trash the place completely or if they do, they burn it to the ground and the insurance agent writes me a check.  But I digress...

The cheapest money out there are owner-occupied residential loans.  Would it be possible for my daughter and I to buy a house together as an owner-occupied if I wasn't living there?  3% down and 4% fixed makes the potential numbers look fantastic when you consider the room-rents coming in on the rest of the house.  To be clear - I'm not attempting any fraud here.  I'm curious if owner occupied must be maintained (for a year) by both/all parties on the mortgage or just one of them.

My daughter is just now 18 so she has no credit to speak of but she does have some nice income from two part time jobs.  I'm not sure how much of a monkey wrench her lack of credit history is going to have on the process so I'll need to check with a bank at some point too.

I'm looking at options for buy and hold house hack 3 and 4 plexes for me closer to home that would happen in conjunction.  My income and credit are great and debt to income after I sell our current house would probably support all of this without factoring rents so in short, 'is this possible'?  Thanks for this and for everything on the site.  If anything like BP existed 15 years ago when I liquidated the first set of rentals, I'm sure I would have made them work!