Updated over 7 years ago on . Most recent reply
Should I Buy My Parent's Home?
Hello,
Here is my situation. I moved into my parent's rental property a couple years ago. They have blessed me with paying only $1200 for a 3br and 1 bath house when the previous tenant was paying $1800. They owe $187,000 left in their mortgage. As of late, I have became interested in real estate and purchasing the home for the need of a tax shelter and increase my networth.
My parent's house at the moment is valued at $500,000. I spoke with my parent's long time property manager and said that with a minor upgrade of kitchen and bathroom, it can be valued at $560,000. I spoke with my parents and they agreed to a purchase price of $470,000 which is below market value.
Problem: My plan for the rest of the year was to pay off $40,000 worth of debt. I have $10,000 in emergency fund and don't want to touch that. I don't have 20% to avoid PMI. I don't want to put 3.5-5-10% FHA because the total monthly mortgage including property tax, and home owners insurance can be between $2200-2900 not even including utilities.
We do live in southern california so housing prices are high. What are your thoughts? The main reason for interest in the property is because I can purchase the property below market value at $470,000 and remodel and reappraise and can be valued at $560,000. I was told it can be rented between $2300-2800.
Please help