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Updated over 10 years ago on . Most recent reply

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Brie Schmidt
  • Real Estate Broker
  • Chicago, IL
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Helping my brother get into landlording

Brie Schmidt
  • Real Estate Broker
  • Chicago, IL
ModeratorPosted

So my brother is about to graduate with his PhD in engineering and is looking to buy a MFH when he relocates for work. Being a PhD student - he has never had a "real" job with a W2 income - but he has 25% down.

He is looking at Boston which is not a cheap market, so even though he will have a good salary without 2 years of employment history they can't count it. And he can't use the rental income to qualify because he does not have 2 years of land lording experience.

So my questions is, could we form a LLC and with me having 25% ownership so it will take into consideration my landlording history / income / credit. Then after 2 years we could transfer title to him and then he could refi conventional. Will that work? Are there other ways I could leverage my experience to get him started?

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Most Popular Reply

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Albert Bui
  • Lender
  • Bellevue WA & Orange County, CA
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Albert Bui
  • Lender
  • Bellevue WA & Orange County, CA
Replied
Originally posted by @Brie Schmidt:
So my brother is about to graduate with his PhD in engineering and is looking to buy a MFH when he relocates for work. Being a PhD student - he has never had a "real" job with a W2 income - but he has 25% down.
He is looking at Boston which is not a cheap market, so even though he will have a good salary without 2 years of employment history they can't count it. And he can't use the rental income to qualify because he does not have 2 years of land lording experience.
So my questions is, could we form a LLC and with me having 25% ownership so it will take into consideration my landlording history / income / credit. Then after 2 years we could transfer title to him and then he could refi conventional. Will that work? Are there other ways I could leverage my experience to get him started?

Not sure what banks you're using but I can use his income if its salary or base pay with less than 2 years just need his diploma and transcripts to document his education time as work history. He can be freshly out of college but as long as he can obtain an employment contract or has his first paystub from his job then I can use his income for the purposes of qualification. I just cant use income that requires 2 year history such as: bonus, commissions, reimbursements, over time, etc etc (variable income).

With regards to landlord experience, the 2 years is only necessary if the loan is sold to Freddie Mac or a portfolio lender who requires 2 years, Fannie Mae does not. With Fannie I can immediately use 75% of gross income - mortgage payment and qualify him for a non owner property or owner occupied property.

No LLC needed plus FNMA/FHLMC cannot fund into entities only live names and living/revocable trusts.

Only lenders who will fund with LLC holding Title are portfolio or other non conforming lenders/banks.

Hope that helps.

  • Albert Bui
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