Buying a townhouse for my father who fell on hard times: the liability of real estate long term

[Bobby S]

All,

My father fell on hard times like many folks. He essentially lost everything (including a good credit score) and is at a time where retirement is probably best for him. He will have social security and some pension, so he will have an income, one that would support a $1200 payment on a place (and have money left for other expenses, including maintenance on a place as it is new so there should be minimal).

I think it would be best to have that payment locked in for the rest of his life so that if rents fluctuate he won't have to worry. Therefore I am looking at purchasing a townhome and having him pay me rent directly. The townhome is $110,000 and after monthly fees with a 20% downpayment the payment would be approximately $900. I would ask that he pay me $1200 which is actually slightly less than market rents in the area.

The question I have is regarding liability. I n the future if I am looking to buy additional properties I don't want this property to hold me back.

I've heard that mortgage lenders look at the income from a property, take 75% of that and deduct that from the total expenses. I've seen some banks want a year and some want two. I've never really gotten a straight answer on this and was hoping someone here could provide me sound advice on how banks view this. In this particular example as long as my father is paying me the $1200 per month on a $900 mortgage and paid any maintenance himself would the lenders wipe out the liability?

I understand generally there is liability by doing this for a family member and that generally this isn't as good an investment if I purchased an independent property (I know there are much better deals out there). That said, it is my father and if I can help him I will - I just want to know what my liability could be when looking at getting future mortgages (again assuming my father paid on-time and the amounts stated previously).

I really appreciate any insight and help you all can provide. I have some additional questions re: multi-family loans (I own one in Fort Lauderdale right now), but I'll leave that for another day while I try to figure this out for my father. Thanks again.

Bobby