Updated over 3 years ago on . Most recent reply
Structuring Private Investor House Hack
My father has expressed interest in investing with my husband and I on a multi family rental property. My husband and I with our kids would live in it and house hack and manage the property. Neither my husband and I nor my father have enough cash to cover the full cost of a property so a traditional lender will still need to be part of the scenario. Since we will be residing in the property, we will also probably use a 3.5% or 5% down payment loan program.
What I can’t figure out is how to structure a deal so that my father will make a profit within a few years. And hopefully want to invest with us again. Lol. My initial thoughts are that he would be a cosigner and provide the down payment. But he probably does not have enough to cover 20% down payment. So when it comes time to refinance in a few years and get him his money back plus profit, how would I do a cash out refinance and leave the typical 20% in the refinanced loan and be able to pay back my fathers investment plus a percentage of profit? It seems like we would have to bank on appreciation, which seems risky and not guaranteed.
I feel like there’s something I’m missing, since people do deals with private money all the time. I would love some experienced private investors to share what’s worked well for them. Any insight would be greatly appreciated!