Buying Apt for Parents as rental tenants

[Leonard Bell]

Hello to all my fellow Bigger Pockets people! So I don't know if what I want to do is actually possible or if I'm missing a few things before I can actually get started. I'll give you guys a breakdown of the situation and if you guys can help fill in the gaps or any helpful tips that would be awesome. My parents are currently renting the apt they live in. I want to buy a 2/2 apt with a mortgage equivalent to their rent or close to it (1K) that way they could be comfortable in knowing they don't have to worry about the apt they will be living at for the rest of their time. I have enough money for a solid down payment but NOT the full 20% usually asked for without risking some of the emergency fund for the apt (I'm aware of PMI) The location of the apt will be in Hialeah, FL. But I feel like I have a few problems blocking all of this from moving forward right now. First, I lost my job due to the pandemic back in the start of it all. Luckily I've still been able to save (not much) but not dip into any of my savings. But my earned income is gone and on paper I'm afraid that wont work well for a lender. On top of that my father went through a medical problem and now isn't working due to it. But he will be collecting a disability check. My mother has quit her job (she didn't make much to begin with) to take care of my father. She also will be receiving a disability check. Both these checks will amount to more than any rent that would be in the area that I want to buy the apt in. So the mortgage will covered easily I would assume. They have no debt and my mothers credit score is in the 800s. I have very little debt and credit score is in the low 700s. I'm not looking for a cash flow deal here. I want this property to help them and also one day have it for myself when the day comes that they are no longer around. Appreciation and Equity are the goals for this deal. So what I'm trying to find out is if I can still make this happen somehow? I don't want to approach a lender yet without more information. I know location and Price range of the type of property that I want. But am I stuck here until I get a new job? I expect to be back to work by the time I'm able to get this property. Would getting a non-occupant co-signer be the only way to execute a situation like this?

[Brad Hammond]

Hey @Leonard Bell, I like your plan but as you said, you are stuck.  Note that I am not a lender but here is my take on it.  Yes, you will need to have income coming in before you can qualify.  Maybe it will be better for you to hold off till you can get rehired.  

Another option is to have someone else on the loan.  This could be your parents and using their disability checks as income (though it doesn't sound like that will be enough).  Is there anyone else that would co-sign on the loan for you?  You could refinance the loan in 12 months once things have stabilized to get them off the loan. 

[Roberto Ruiz]

Hey Leonard. I'm from Miami grew up in Hialeah all of my life as well. I too tried to find a place for my parents earlier this year further south from Hialeah. I think that is a great idea as long as you have a good down payment and make sure the numbers work with your specific goals. We had actually gone under contract but then backed out due to the strict guidelines of this buildings HOA when we went in for an interview. A lot apartments Hoa that I know of in Hialeah don't have "reserves" like the one I was attempting to buy for my parents. The bank wanted us to place at least 30% down on this property. You not having a job might affect the lender from giving you a loan. My advise would be to partner up with someone or consider if "sellers financing" would be an option that the buyer would consider asides from calling and trying to see if a lender would qualify you for a loan. You can also buy a duplex with a owner occupied FHA loan with a low down payment of 3.5% live on one side, your parents on the other and split the mortgage between you and your parents for the first year. Then move out and rent your side of the unit for full price which depending on the rent you collect will cover most if not all of the mortgage payments for your parents. financing is the part that I think you need to focus on getting figured out. Best of luck bud.

[Roberto Ruiz]

@Leonard Bell