Transferring Home Ownership Post-Purchase

[Alex Casperson]

Hey BP. I'm getting ready to purchase my first property this year (July closing at the latest, hopefully sooner) here in Massachusetts. I have a partner that I am going in on it with and he will be house hacking the property. The plan is to purchase a small multi-family, reno a unit while my partner lives in it and then he will move out after a year or two. We are primarily doing this because my partner is moving to the area in the summer and we would love to take advantage of a 3.5% or 5% down payment FHA loan. I spoke to a lender yesterday and was told that with a multi-family, you cannot do less than a 25% down payment if you have a Non-Occupying Co-Borrower. So ultimately, I am planning to transfer money to my partner months in advance, he will purchase the property with an FHA loan, proceed with the house-hack and then sometime down the road, we will need to add myself to the mortgage.

There will be legal paperwork for an agreement between us outlining the details and timeline but I am not sure how to actually do this transfer? I have an LLC that I was going to do most of my investing through. Would it be easier to just add him to the LLC vs. splitting it later? I have no problem doing this as this is expected to be a long time partnership and I can make a 2nd LLC if needed down the road. We would likely also Re-Fi once the rehab is done for a BRRRR. Should it be done then? Any info you all can provide would be very much appreciated!