Could be a tax issue for your relative since the IRS could consider it a gift and you might have to pick up the interest as income.

Originally posted by Ofgift Gift: Is he required to by state law?

Just 23, I was gifted money by my grandparents and lent money by my parents for a deal that I closed on earlier this year.

You can purchase 2-4 units under Home Possible with 5% down payment (3% your own seasoned funds rest can be gift) as primary residence. 

I know of a similar situation, where the property was bought by the Father of 2 adult women as a gift for them.It was a cash sale, and they used the house as an office (with no mods to it).Both girls had been long time riders, and through some paperwork their husbands owned no of it (if they divorced or otherwise).They made a few bucks, but were not getting rich...and loved all of the renters owned and leased horses.I point this out regarding prospects (cash buyers vs those who would borrow for this).Just my 2 cents.

They said something about a gift but is there an easier way to do this?

Money that was a gift from family member or an investment from a partner will not count towards your total, so that's not really a viable way to raise money if you are doing conventional financing.If you are going to get a commercial loan, then all the rules change, and you'll have to check with someone with more experience with that side of things. 

That's $1,800 a year that you are losing and gifting to the tenant.

If your parents carry the note and will it to you when they pass- that is a gift and might be subject to tax.

Depending on what type of tile you picked out or intricate pattern that doesn't seem too high.