Rental Property Investor · Moreland Georgia · Member since 2015 · 43 posts · 12 votes
Hello BP.
I'm looking to purchase my grandparent's condo for a rental
It's in a decent area and has currently been rented by the same tenant for the past 3 years at $625 a month.
My grandparents are in their 70's and don't want to deal with the rental anymore. However the complex no longer allows rentals. My grandparents can because they were grandfathered in because they purchased the property about 30 years ago.
Is there a way around this rule if I leave them as a partner on the lease? I do not plan to live in the property.
Thanks any advise is appreciated.
Investor · Islip, NY · Member since 2014 · 25 posts · 13 votes
9y
It might be possible to have your grandparents do a cash out refinance and add you to the title. My parents did this for me when I purchased my Father's duplex in 2005. The cash went to my parents and the loan is in my name. We are both on title. Have a lawyer check to see that this does not violate the condo rules and/or what percentage of ownership might need to be retained. Yes it would seem that your Grandparents would still have to sign any written lease and you would fill the role of property manager to keep your Grandparents out of any tenant drama.
Investor · Islip, NY · Member since 2014 · 25 posts · 13 votes
9y
It might be possible to have your grandparents do a cash out refinance and add you to the title. My parents did this for me when I purchased my Father's duplex in 2005. The cash went to my parents and the loan is in my name. We are both on title. Have a lawyer check to see that this does not violate the condo rules and/or what percentage of ownership might need to be retained. Yes it would seem that your Grandparents would still have to sign any written lease and you would fill the role of property manager to keep your Grandparents out of any tenant drama.
Real Estate Investor · Austin, TX · Member since 2015 · 65 posts · 50 votes
9y
This is just an idea, create a trust naming you as beneficiary and deed the condo to the trust. Your grandparents are initial trustees, resign and name you trustee as soon as the trust is funded. Talk to your legal and tax advisor.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
9y
@Daniel Taylor How about a Sub lease. They lease it to you and you lease it to the tenant.
I don't know how to structure it but possibly life estate would be a work around.
One thing to consider is when you grandparents pass, hopefully a long time from now, The condo will pass to the heirs at a stepped up basis. This reduces capital gains.
@Daniel Taylor How about a Sub lease. They lease it to you and you lease it to the tenant.
I don't know how to structure it but possibly life estate would be a work around.
One thing to consider is when you grandparents pass, hopefully a long time from now, The condo will pass to the heirs at a stepped up basis. This reduces capital gains.
This is the same thing I was going to suggest ... AKA "Master Lease" if you want to research further. You can couple this with a purchase option to make sure that you could acquire the property on set terms in the future, even possibly after their passing ... that is assuming that you would NOT be the one named in their living revocable trust as the inheritor of the property and that method may not get you grandfathered in with the HOA to continue renting it out. Down side is you wouldn't likely get the stepped up basis benefit from inheriting as Ned mentioned, but that whole "You are going to leave the property to me, right?" conversation would be an awkward one to say the least :)
Rental Property Investor · Moreland Georgia · Member since 2015 · 43 posts · 12 votes
9y
We found a way around. If no money is exchanged then I will also be grandfathered in the rules state that if the property is SOLD then the buyer is not allowed.. so my grandparents are "gifting" the property to me and I'm going to pay them 32k for an ink pen. :) in a totally separate unrelated deal.
Rental Property Investor · Moreland Georgia · Member since 2015 · 43 posts · 12 votes
9y
We talked to the property manager, a long time family friend and she said others in the complex have been doing that for years and they can't fight it because there is no way to prove money was exchanged.