Buying in Los Angeles and partnering with someone

[Zhenya Levchenko]

Hello everyone,

I am new to this site and wanted to say hello. My partner and I are looking to move in together (we are currently renting), and due to very expensive rents in Los Angeles, I am considering to buy. I know the timing may not be the best, but I am giving this a thought as it looks like it would be cheaper to buy than to rent a 2 bedroom unit. 

I am looking at 2-4 unit properties in either Northeast LA or Long Beach (because it has no rent control). Is it possible to find a reasonable deal or is it just too competitive? any feedback would be greatly appreciated.

My second question: I don't really have much money saved, but I have a good job and a good credit. A friend of mine offered to give me the down payment (5%+ fees to buy) as long as she becomes a partner on the property. She would take advantage of my ability to buy as a first time home buyer. She wants us to pay mortgage 50/50 and split expenses and income from rent 50/50. I'd be living in one of the units, but she won't be. Does this arrangement sound like a good deal for both of us? How will it affect my ability to buy another property in a few years (she won't be on this loan but I would add her to the deed). My hope is to save money and hopefully move and buy another property in a couple of years... And finally, what type of paperwork/contract do we need to sign?

Thanks so much in advance!

Best,

Zhenya

[Brett Goldsmith]

Sounds like you are winning by getting money to get into a home and she is winning by getting into a home without having to get a loan in her name. Just know you hold the liabilities and if things go south, you'd be the one holding the bag. 

5% in LA can be a chunk of change so she has some commitment.

What's the arrangement with the payback of that principle or is that returned upon the sale of the home or does she recoup that first from rent?

Besides that sounds like a decent arrangement with a truly trusted individual. 

Having a loan will increase your back end ratio. Eventually you hit your ceiling and will need to make more money to be able to carry more debt. Also you can only have X many of X type of loans, so you're shooting one of your bullets.

Best of luck,