Buying House and Renting to Roommates

rme

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9:37a, 9/1/24

AG

My son is considering buying a house in St. Louis he's been living in with two roommates (friends, not randoms). He would buy it on his own, live there, and continue to rent to one or both roommates. This purchase is not intended to be a rental property. At some point he will no longer have renters.

What are his options for dealing with mortgage? Should he buy on his own financials and not mention current renters? Should this be in LLC for liability even if renting is not long-term plan?

dubi

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1:40p, 9/1/24

AG

Not a realtor. I'd have him buy it by himself.

Also have a real lease drawn up with his friends so he is an "official" landlord and has legal remedies for eviction if anything goes wrong with the friendship.

Charge for lawn and maid service as part of the lease; it gets awkward when one is much messier than the others.

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SteveBott

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1:48p, 9/1/24

AG

Unless he can document the payments for 12 months by bank statements deposits he cannot use rental income. It would be best to finance on his own income, credit and debt. As said a formal lease between all parties is the way to go.

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aggiepaintrain

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1:49p, 9/1/24

AG

It's called house hacking when you buy a home and rent out rooms, it does not have to be in a LLC.
I'm a mortgage lender as well
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Yesterday

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5:02p, 9/2/24

AG

I did this while at A&M. I was lucky because my friends were good friends and tenants. We also had a good contract in place that spelled out all of the expenses and how they would be paid. IMO "all bills paid" rent is the best way. Its tough to filter out arguments if someone moves back home for a month and has to pony up for electric and water.

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rme

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9:50p, 9/4/24

AG

Thanks to all. He just got pre-approved and is working on offer details.