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Thread: Property Rental Question

  1. #1
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    Default Property Rental Question

    I currently own a home and a buddy called me up and asked me for a favor: To sign a 6 month lease stating that I am renting his parents house, to which obviously I am not. Is this okay for me to do and will it affect me personally at all in the future?

    Backstory:

    My buddy owns 2 properties. A primary residence and a rental property. He is aiming to purchase a third property, but because he would own 3 properties total, his debt ratio would go up and would not get approved. The only way his broker said it will get pre-approved is if his parents co-sign on the mortgage, move out of their own residence and move in with buddy into a 'generational household' and 'rent their place out' to provide proof as supplemental income to decrease buddy's debt ratio. For more context, his parents' house, which is the place I'd be 'renting' is paid off.

    In reality, I'm just signing it on paper to complete the process. Buddy will have 3 properties, one co-signed by his parents. Parents are not moving out, still going to live in their own place, but on paper, they are live-ins with buddy and I am the 'renter' of the parents place.

    Hope this makes sense. I appreciate any feedback. Just wanted to see if I can help him out without anything coming back to me if ever.
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    Are you comfortable helping your buddy commit mortgage fraud? Because that's what this would be. In reality he probably won't get caught but I guess depends on your ethical boundaries.
    Nolan

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    Why help someone trying to game the system?

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    TLDR: Buddy asked me to sign my name to a lie, is this OK?

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    Sketchy af
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    Quote Originally Posted by pheoxs View Post
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    Are you comfortable helping your buddy commit mortgage fraud? Because that's what this would be. In reality he probably won't get caught but I guess depends on your ethical boundaries.
    He explained to me that the burden of this would bear down on him entirely. Which he is okay with and has accepted. Ethics aside, I am on the fence, because of any implications I would face. Which brings me to my original question.
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    Quote Originally Posted by JordanEG6 View Post
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    I currently own a home and a buddy called me up and asked me for a favor: To sign a 6 month lease stating that I am renting his parents house, to which obviously I am not. Is this okay for me to do and will it affect me personally at all in the future?

    Backstory:

    My buddy owns 2 properties. A primary residence and a rental property. He is aiming to purchase a third property, but because he would own 3 properties total, his debt ratio would go up and would not get approved. The only way his broker said it will get pre-approved is if his parents co-sign on the mortgage, move out of their own residence and move in with buddy into a 'generational household' and 'rent their place out' to provide proof as supplemental income to decrease buddy's debt ratio. For more context, his parents' house, which is the place I'd be 'renting' is paid off.

    In reality, I'm just signing it on paper to complete the process. Buddy will have 3 properties, one co-signed by his parents. Parents are not moving out, still going to live in their own place, but on paper, they are live-ins with buddy and I am the 'renter' of the parents place.

    Hope this makes sense. I appreciate any feedback. Just wanted to see if I can help him out without anything coming back to me if ever.
    1. Run
    2. Reconsider you choice of friends.
    3. Consult a lawyer before doing anything like this (your buddy pays)
    4. If you proceed, charge your buddy a massive fee. I mean big.

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    Quote Originally Posted by JordanEG6 View Post
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    He explained to me that the burden of this would bear down on him entirely. Which he is okay with and has accepted. Ethics aside, I am on the fence, because of any implications I would face. Which brings me to my original question.
    Well ... when the broker requires proof of income what happens? I imagine its more than just a lease agreement, typically they'd ask for bank statements showing the income flowing in. So would you be paying your buddy's parents to make a paper trail? Or are his parents going to begin paying themselves but saying its coming from you? (Despite both cheques and e-transfers showing who its from). This gets quite complicated as soon as they ask for proof of incomes.

    What it sounds like to me is he can't afford to buy a rental property and is trying to shift everyone around on paper to claim the new property will be his personal living address and thus lower lending requirements.

    Either way ... convoluted as fuck and seems sketchy. No way I'd risk any kind of financial fraud or liability for a buddies investment. This sounds like something he should get a different family member or cousin to 'move in' to their parents place.
    Nolan

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    if it didn't matter, then he wouldn't be asking you to do it.

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    Tell him to tell his broker to submit it with Fair Market Rents (supported by a realtor’s letter) it’s completely reasonable to NOT have tenants in place if you are converting to a rental… fucking rookie brokers, who puts real names on fake rental agreements?

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    Identifying bubbles in RE isn't hard. Identifying when they will burst is hard. But open, brazen fraud occurring in the mortgage space is as good as any indicator.

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    in theory you could put your name on a lease for a timeline that starts after he takes possession of his new place and then claim you changed your mind if anything goes sideways.

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    Well, based on the responses and my initial instinct not to do this, I decided it will be a pass for me. Thanks everyone.

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    Quote Originally Posted by Buster View Post
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    Identifying bubbles in RE isn't hard. Identifying when they will burst is hard. But open, brazen fraud occurring in the mortgage space is as good as any indicator.
    This is so very typical… but you know it’s bad when you get them claiming homes have basement suites. My favourite one was when we got the appraisal back and the “kitchen” was a folding table and a stove that wasn’t plugged into anything… they didn’t even hide the cord

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    Quote Originally Posted by JordanEG6 View Post
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    Well, based on the responses and my initial instinct not to do this, I decided it will be a pass for me. Thanks everyone.

    It goes against every fibre of my being to lead someone down the path that does not lead to the potential for my entertainment. I must be off today.

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    Quote Originally Posted by Buster View Post
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    It goes against every fibre of my being to lead someone down the path that does not lead to the potential for my entertainment. I must be off today.
    You must be a wholesome person, good sir
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    Quote Originally Posted by JordanEG6 View Post
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    You must be a wholesome person, good sir
    Only today

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    There is 0 risk to this because real estate only ever goes UP and never DOWN. If real estate went down, he could just "sell" the property to you on paper, and then you "pay" him by not reporting him to the authorities for fraud. Everybody wins. Also, you could f' his dad.
    Tap, Rack, BANG!

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    Quote Originally Posted by ExtraSlow View Post
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    if it didn't matter, then he wouldn't be asking you to do it.
    This...... Why he no ask family member.
    Originally posted by GTS Jeff
    You know those bored stay at home moms who's entire lives revolve around driving their kids to soccer, various cleaning accessories, and worrying about neighbourhood rapists? The kind of people that watch the View and go "uh huh..." Those unfulfilled people who try to fill the void in their empty lives by writing whiny letters to the editor complaining about shit that no one really cares about?

    Well imagine if instead of writing that letter to the editor, she just posts on a car forum for car enthusiasts. That's Kritafo.

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