Dad wants out of rental property. Any no money down ideas ?

[Josh Nabors]

My dad is retiring and getting rid of a couple of his properties. He asked me if I wanted to look into getting the properties. A year ago I bought a foreclosed duplex with an fha203k loan and owner occupied. I am now looking at getting more properties.

Is there any way for me to get this property with no money out of pocket? The house is worth about 90k and he has about 70K left on the mortgage. His loan is not assumable. He is not looking to make any money. 

I've read about Quit Claims, refinancing the property into my name, and seller financing. How can I purchase this property for the price left on the mortgage without having to come up with a 25% downpayment?

For what its worth, the property is out of state. It has been rented for the last 3 years at 950/month.

[Albert Bui]

@Josh Nabors

Hi Josh,

I am working on a scenario just like yours.

There are many ways to tackle the above.

My client with a similar scenario also wants to receive property from her dad with out any money from their pocket.

So what we will end up doing is we'll take title to the property subject to the current note.

Then after 1 day from taking title we will apply for a rate term refinance (fannie mae only requires 1 + day on title for rate/term refi).

As long as our LTV is 75% or lower we can do this refinance (along with acceptable income & reserves & credit score) since this is an investment property refinance.

The difference from the value that the property was gifted at and the cost basis that was left in the property is considered the "gift," so there are certain tax ramifications that you might want to talk to your accountant about with your dad.

I've checked with my underwriter and we're about to review this file soon.

The above is really just a creative strategy of Sub2 and a conventional strategy of a regular Rate/term refinance so nothing really complex.

Good luck on yours.