My friend called me with a proposition - help him purchase a property in Oregon so that he can breed dogs and grow crops on it. The deal is he'll pay me $25,000 for taking the loan out on my name and potentially $50,000 if things go well. He's a very good friend that I trust. Beyond that, I believe in his drive and ambition. He's not able to get approved for a loan at the moment because he has a mortgage on another property as well as some credit card debt (the credit cards will be paid off in the near future). He will be the one making the mortgage payments. I am just a loan proxy so to speak. I will have no equity in the home. I'm mainly in it for the signing bonus and some potential tax benefits. I know I run the risk of him defaulting on the loan. That is a risk I am not worried about because I know he collects about $3700/mo from the military, which should cover the mortgage. He also owns a barbershop that helps pay the bills.
I eventually want to try the house hacking strategy in the San Diego market by some time mid to late 2021. I know that in order for me to apply for another loan I'll have to take into account the loan for the Oregon property. The plan is that he will transfer the loan/deed from his current mortgage in 2021 and hop on the Oregon property loan/deed which will allow me to be released from it.
I've been told removing my name from a loan is not easy. I'm guessing this deal will also require me to get a little creative when applying for future loans. Maybe I can use a HELOC? I might need a co-signer? What are some other risks I'm taking on?
I'd eventually like to use the depreciation tax benefits from the property. I'd also imagine this deal would help with my credit. What are some other benefits you see in a deal like this?
Some other specs:
2019 Gross Income = $78K
My Current Rent = $1125
This will be my first RE investment. No other debt.
Oregon Loan = $266K
Oregon Down Payment = $50K
