How to work a friend's money into a deal

[Nathan Estochen]

Hey BP,

I'm looking for my next multifamily to owner occupy and am limited by my income and prices in the area - but need to stay somewhat close to Boston, MA for my full time job. 

I have a close friend with a large amount of cash who wants to lend me money to speed up the rate I can acquire properties. The plan is acquire 10+ unit multi's in the future but I need a place to live in the short term and thought this is a good way to get their toes wet with involvement on a first deal - a sort of proof of concept.

For this particular deal I'm still interested in bank lending and would use the friend's money as a down payment to increase the variety of locations I can buy.

My question is what are ways around the fact that a bank would not see the friend's money as a legitimate down payment, but as another form of a loan? How does my friend need to be worked into the deal for the bank to honor it? Co-sign? 

Thanks,

Nate

[Pete Schmidt]

Form an llc and becomes a partner would probably be the easiest.  Other than that you may need to have his deposit sit in your account for a few months so it does not look like you borrowed it.  The biggest problem I have seen with doing this is that you would then need to pay his loan and the mortgage back at the same time.  That usually spreads the profits thin unless you got some super deal.