Question
Creative realestate question. Using friends good credit to purchase?
Ok here is the deal. I want to purchase more realsestate. But my credit is not good right now. I want to purchase a 2 family for $80,000 for investment purposes. I have a friend with excellent credit. Willing to puchase home in her name. I will pay mortagage, and all downpayment and closing fees. And we will write up a contract stating that it is my property all details, and will tranfer ownership in 3 years. So my question is what do I owe her for doing this? How would this be a fair deal for both of us? She is allowing me to use her credit. Do you think it would be fair to give her $5,000 for allowing me to do this. She also suggested living in one of th units ? maybe free or discounted rate? (im not sure i like this idea, because the home will be as profitable for me) any suggestions on how we can make this a good deal for both of us. Also she would be a firstn time homeowner and get that Tax credit.
1 month ago - 5 answers
Best Answer
Chosen by Asker
What you are trying to do is considered fraud. The only legit way to do this is if your friend buys the place and lives in one of the units. The other hurdle you have is sourcing and seasoning the closing costs and down payment. Every underwriter is required to source all funds for down payment and closing costs and because you are going to cover this for your friend she is going to have to explain and document where the money is coming from.
Source(s)
I'm a mortgage banker/broker
by Noneya
1 month ago
Asker's Rating: 
Other Answers
I would get an attorney to write the legal documents you don't want this to ge bad down the road so have it in writing that way both parties understand whats going on and 5k sounds fair for her lending her credit for 3 years I would also put my name on the title when she buys that way the property cant be sold with out your consent and if her credit is strong enough put you on the loan as well to build up your credit....good luck
by wrongedincali- 1 month ago
First all monies exchanging hands in a real estate transaction have to be disclosed to all parties. Second, your friend isn't using the brain God gave her if she does this for you. Thirdly, if you can't afford it, then you shouldn't be buying it. No suggestions except you shouldn't do this.
by Realtoratheart- 1 month ago
Usually a joint venture partner ship is formed (50-50).You supply the expertise and your partner supplies the cash. When properties are sold you split the proffits after expenses. This works great for investors that do not want any thing to do with the mechanics of the investment. They just what to invest and collect the profit at the end. You draw up a JV contract (Rules of the investment) which can include a clause to buyout incase one whats out early. Also will include the duties of each party, accounting report (monthly, quarterly), cash out time etc. Make sure you keep all legal . Telling your mortgage broker you are going to live there as a first time home owner when you are going to rent them is fraud , plus you could void your home insurance.
by Ken M- 1 month ago
You are screwing your friend. Period. You can't afford it because you have bad credit. This speaks volumes. This would be an investment property, and you would need to come up with at least 20% down. And since it's an investment property, she would NOT!!!!!!!!! get the tax credit. (100% sure of this); unless she lied and said she would live in the property, which is a lie and FRAUD.
by real estate guy- 1 month ago