Weird scenario

I started a new business in Florida with a friend who had zero credit. They worked with the DOD, Dave Ramsey people, and just never used credit cards/debt and zero credit rating

So this new business is a good opportunity for them and they need to move to Florida to run it. With no credit they cant buy a house and they are going to rent. I hate that idea of them renting for two years and wasting money....their success in Florida will help me....so they find a house and I buy it in my name but they are going to pay the mortgage and in two years when they have the tax returns and credit they will buy it from me.

I have homeowner's insurance ...but do I need to have them get renters insurance? I add on rental dwelling insurance?

You will need a Landlord Dwelling policy and they will need a renters policy for their contents and personal liability. It's quite possible you may need to get a wind policy as the landlord policy may be exclusive of wind. Just a heads up Florida insurance, especially anything coastal is pretty rough right now. Definitely reach out to someone local there, I could probably give you some names if you give me the area. I deal way too much with Florida for my liking. If you do not have an umbrella policy currently you should get one and make sure this location is noted as one of your exposures. Florida has become very litigious/plaintiff friendly.

Unsolicited advise, this scenario is ripe for disaster, but if you are going to move forward, you should be the one that pays the mortgage and they pay you rent, that way their missed or late payments don't affect your credit. You should have a formal lease agreement in place so you can evict if needed. Everyone's a friend/great person until significant money is involved.

They could build credit up pretty quickly if they rented an apartment through a large apartment complex/company and got a a credit card or 2 and used them and paid them off regularly.

Buy the house cause you want the investment, then rent it to them. You can go cheaper than market, if you want to help them out. Don't mention anything about selling it to them or imply as much. When a couple years is up and they have credit, you can then sell it to them, if they want. A lot of things change in a couple years. They might not like the area, they might not be who you thought they were, they may have to move back. Long and short of it, you don't need to make these promises and agreements with them to help them and do all the things you mentioned, this just keeps your options open.

And, yes, renters insurance. Will help stop any hard feelings that may develop if something goes wrong. Don't need $600 repairs ruining your business venture when a $100 policy would have handled it.

That's what I figured and wanted to verify.

Thanks for the advice. I did this very aware of the risks. I hire people to run my businesses and it either works or becomes a **** show. It's life.

If they are Dave Ramsey people, they would know about Churchill Mortgage and manual underwriting. It would probably be a higher interest rate, but it would be better than renting from your boss.

iisanaggie said:

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If they are Dave Ramsey people, they would know about Churchill Mortgage and manual underwriting. It would probably be a higher interest rate, but it would be better than renting from your boss.

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Really appreciate you taking the time and giving me your advice. I'll let them know.