Buying Property from Family WAY Below Market Value
So I have a situation I don't know how to handle or who to speak to about it, but since it has to do with real estate, I thought BP would be a good place to start!
Here's the situation:
My sister-in-law is in serious debt and can no longer afford the payments on her house. Her house is on 10 acres of land that were gifted to her from my father and mother-in-law. The land has been in the family a long time, so they don't want to lose the land to someone outside the family. This is more important to them than making a profit on the sale of the house. Especially since they believe creditors will immediately take whatever profit is made. So the family has asked me to buy it because I'm the only one that might be able to.
Here are some rough numbers:
Sister-in-law owes on mortgage: $95k
Market value: $160k to $200k
How would this sale work? I won't be moving into the property, so is a loan just like a loan on any other investment property where I will have to make a down payment of 20%? If so, I can only do it around $100k because of the cash I have available right now. Or is there a way for me to buy it with no money down since I will have instant equity?
I also don't want to finance it for too high because I still need to be able to rent it out and make positive cash flow. It should rent for $1,200.
My sister-in-law is concerned that their creditors will take them to court for selling below market value. Is that possible? Or is it fine as long as they sell the house for enough to pay off their current mortgage? Would the selling price be considered $100k? Or would it be considered $200k with a gifted down payment? Is it legal for them to sell that far below market value? What tax implications would there be for both of us if the down payment is considered gifted?
Thanks for any help or referrals you all can provide!