Charitable Giving with Rentals

[Christian Beyer]

Hello fellow BP members, My brother and I are looking at a BRRRR project for a home in Phoenixville, PA that we have purchased and begun the renovation. Under normal circumstances in this healthy market we would have no trouble renting at market rates and getting the approved refinance with a familiar local bank that has already agreed to refi at the end of the rehab. We have decided to rent this home to a low income family in need of housing. Our target rent for them is around 2/3 market rent which will just barely cover the mortgage. At this rate the bank would likely not approve the refi. We are pretty established in this market and have a dozen other rentals in the area, so we are less worried about the positive cash flow, we just want to do some good with this unit. My thought was that the lease could be for market rent with a clause providing a business credit, from us each month, bringing the rent to a level that the family can afford. I have no experience in this and have no idea how the bank would react. If anyone has any thoughts or experience on this topic I’m sure others may benefit from it in the future! Thanks! Christian & Erich in Phoenixville