Purchasing a Property for Parents

[Joel G.]

Hello All, 

Happy holidays! I'm hoping you all can help provide some guidance/info on my situation. I'll try to make this as concise as possible. 

I'm looking to buy a property for myself (owner occupant) in the next few months. I've been pre-approved for a loan, so now its a matter of finding a property that can cash flow (looking for a multifamily property where I'd live in one unit and rent the remainder). This would be my first property and I'd be taking advantage of a low down payment. 

An opportunity has recently come up where my parents would like me to buy a property and rent it to them, and they would help me with around 50% of the down payment. I believe they can qualify for their own loan; however, they prefer to have me purchase it so that I can have it as an investment property down the road. I've spoken with a few loan officers/credit unions and it seems that the home for my parents would have to be purchased using an investment loan (20% down). This would be subject to my financing ability, but I'm assuming since i don't have any other debt, an investment property should be do-able.  

Assuming this is something I can/should pursue, I"m trying to make sure I'm considering all avenues so that I'm not left with too much exposure. I'm thinking there are a few avenues that I can take and am wondering what you all would suggest:

1 - I can apply for an investment loan for my parents property and rent it out to them. The only item I am concerned of is that the debt on this would obviously go on my "books" and that would potentially impact me from getting a loan on a primary residence for me in the near future. In addition, I'm worried this might tie up too much money and I might miss out on a deal.

2 - I can co-sign a loan with them, which I think would allow me to refinance the home down the road under my name only, but I think this would leave me with the same concerns as #1 (in terms of qualifying for a primary residence)

3 - I can see if there is a legal way to obtain the property - I'm assuming setting up a living trust or having them sell me the property at some point down the road equal to their cost at the time. 

4 - Let this pass and focus on buying a primary home first.

Any thoughts? 

Thanks in advance! Looking forward to your responses. 

[Joel G.]

@Albert Bui Thanks for the quick response! I hope you have happy holidays :)