Real Estate Investing School Podcast - Episode 250: REAL DEAL: Co-Sign Your Way Into Real Estate
Release Date: April 3, 2025
Host: Brody Fossett
Introduction
In Episode 250 of the Real Estate Investing School Podcast, host Brody Fossett delves into the strategic use of co-signing as a pathway into real estate investing. Titled "REAL DEAL: Co-Sign Your Way Into Real Estate," this episode offers listeners a comprehensive exploration of how co-signing can be leveraged to secure better financing terms, build partnerships, and enhance cash flow in real estate deals.
Understanding Co-Signing in Real Estate
Brody begins by introducing the concept of co-signing within real estate investment strategies. He emphasizes the mutual benefits that co-signing can create for both parties involved.
"[00:05] Do you have a little brother? Do you have a little sister? [...] that creates a win-win scenario."
Co-signing allows individuals with strong credit and financial stability to support partners who may lack these attributes, thereby facilitating access to better mortgage terms and investment opportunities.
Building Win-Win Partnerships
A significant portion of the episode focuses on structuring effective partnerships. Brody highlights the importance of clearly defining what each partner brings to the table to ensure a balanced and mutually beneficial arrangement.
"[10:15] What do I bring to the table and what does this other person bring to the table and how do we create like this win win scenario?"
He discusses scenarios where one partner provides credit and expertise, while the other contributes capital and commitment to occupy the property. This synergy not only enhances loan approval chances but also optimizes the investment's cash flow potential.
Personal Experiences and Lessons
Brody shares a personal anecdote about his first real estate purchase, where his parents co-signed the loan for him. This experience underscores the practical benefits and potential pitfalls of co-signing.
"[20:30] I was a college kid [...] my parents co signed for me."
He reflects on how a more structured partnership could have amplified the financial benefits for his parents, demonstrating the importance of thoughtful deal structuring.
Financing and Cash Flow Strategies
The discussion transitions into various financing strategies that complement co-signing. Brody introduces the POP (Power of Primary) method, which leverages primary residency to secure favorable loan terms.
"[35:45] The POP method is the power of primary [...] allows you to get way better terms when it comes to financing."
He explains how co-signing can reduce the required down payment, thereby increasing the cash on cash return. By minimizing initial investment while maintaining or improving cash flow, investors can accelerate portfolio growth.
Practical Applications and Scaling
Brody explores the scalability of co-signing strategies across different property types, from single-family homes to multimillion-dollar estates with multiple income streams.
"[50:10] You can go house hack, slash partner this multimillion dollar place [...] own half of it and maybe you've got it at a good deal."
He provides examples of how partnerships can be tailored to accommodate various investment scales, emphasizing the flexibility and adaptability of co-signing as a fundamental strategy.
Overcoming Challenges and Final Thoughts
Addressing potential challenges, Brody advises listeners to consult with lenders and legal professionals to navigate the complexities of co-signing agreements. He also encourages investors to take proactive steps in building and leveraging their credit and financial resources.
"[58:25] If you are somebody who doesn't have the credit yet, or maybe you don't have the capital yet [...] partner with somebody that does."
Brody concludes with a motivational message, urging listeners to seize the opportunity to implement co-signing strategies now to reap long-term benefits.
"[60:00] Now is the time to do that. Now is the time to make that decision [...] you set this up."
Key Takeaways
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Co-signing as a Strategic Tool: Leveraging co-signing can open doors to better financing terms and investment opportunities, especially for those lacking strong credit.
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Structured Partnerships: Clear delineation of each partner's contributions ensures balanced and profitable collaborations.
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Enhanced Cash Flow: Creative financing, such as co-signing combined with owner occupancy, can significantly improve cash on cash returns.
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Scalability: Co-signing strategies are adaptable to various investment scales, from single units to large, multi-income properties.
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Proactive Planning: Early and strategic use of co-signing can lay a strong foundation for long-term real estate investment success.
Conclusion
Episode 250 of the Real Estate Investing School Podcast offers valuable insights into the nuanced approach of co-signing in real estate investments. Brody Fossett effectively illustrates how this strategy can be a game-changer for both novice and experienced investors, providing actionable advice and real-world examples to empower listeners to enhance their investment portfolios.
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