HI..... MY AUNT WISHES TO HAND OVER THE RIGHT TO A HOME IN SOUTH JERSEY THAT MY GRANDMOTHER HANDED OVER TO HER. I WOULD LIKE ADVICE IN WHAT TO DO WITH THIS OPPORTUNITY. I WAS THINKING I COULD USE THIS PROPERTY TO PROPEL ME INTO THE REAL ESTATE MARKET ANY ADVICE OR TIPS WOULD BE HELPFUL. I AM NEW TO ALL THIS SO ANY GUIDANCE WOULD BE APPRECIATE.
Real Estate Attorney & Investor · Greater NYC Area · Member since 2016 · 70 posts · 48 votes
6y
First, make sure the house is debt free. If there is a mortgage or any liens on the house then you will be the new owner of those liens and the lender on the mortgage will have the right to foreclose because it was a fraudulent conveyance. You also want to make sure there are no open permits on the property. Get a basic title search from a reputable title insurance company. It will cost a few hundred dollars.
If there is a mortgage, you will need to get the lender's consent to assign the mortgage to you, or you will otherwise need to refinance the property and simultaneously convey the property from your Aunt to yourself by a "no consideration" deed.
Speak to your accountant about the potential tax consequences of this transfer. If your Aunt remains on the deed with you then you will not be able to claim a stepped up basis and will be subject to larger capital gains taxes when you go to sell because the profit will be based on the value of the house at the time she originally took title.
In reality, all of the above is very minor stuff to work through in order to get a house for practically nothing. Potentially, you could do a cash out refinance while the rates are at record lows and either use the cash to fix up the property and get it rented (let the tenant pay that mortgage for you), and/or use the money toward a don payment on your 2nd rental property.
Flipper/Rehabber · Phoenix Arizona · Member since 2020 · 1k+ posts · 686 votes
6y
I would ask several real estate agents what the house is worth as is?
I would ask the same what the house would be worth fixed up.
If your in the position to have it fixed up for sale or for a rental.?
Some times just a simple face lift ( paint, up dated floor coverings, new light fixtures etc ) may cost you minimum for your return in either more rent or higher sales price.
I then would decide to either use it as a rental or sale it.
Ask your tax accountant which would help you the most.
If the house is in a good market and you don't need the money, You could use it as a rental, get a tax break each year and have a pretty good positive cash flow. It may go up 10 percent a year and also make you pretty good cash each month.
Then you get more equity and money each month. if you need to have someone manage it they will most likely charge you 10 rent and repairs as needed. Not a bad deal if they manage it proper!