Property Rental Question

[JordanEG6]

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.

[pheoxs]

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.

[Twin_Cam_Turbo]

Why help someone trying to game the system?

[ExtraSlow]

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

[msommers]

Sketchy af

[JordanEG6]

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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.

[Buster]

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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.

[pheoxs]

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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.

[ExtraSlow]

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

[ercchry]

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?

[firebane]

[Buster]

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.

[gwill]

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.

[JordanEG6]

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

[ercchry]

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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

[Buster]

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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.

[JordanEG6]

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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

[Buster]

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You must be a wholesome person, good sir

Only today

[littledan]

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.

[dj_rice]

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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.