Buying & Selling Real Estate
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Updated about 5 years ago on . Most recent reply
Conundrum...buying house from recently disabled family member
recently a family member found out he had diabetes the worst way...passed out and woke up in the hospital minus 1/2 of his foot and a toe was also amputated on the other foot. He has not been able to work and has had a tough time making his mortgage payment. He has been in his house 10 years. he has been relying on family to pull him through. After listening to the bigger pockets podcast I made him the following offer:
His purchase price: 80,000 (after 10 years he still owes 72,000)
I am offering to buy his home for $100,000. I will put down 20% ($14,400). He will pay closing costs. Once the deal is done, he will return my down payment and have roughly $10g in his pocket. he will then begin paying me rent for $550-600 a month (mortgage payment plus $100 toward any repairs), property taxes and insurance will be in escrow. That will give me my first deal with essentially no money down, and give him $10g to hold himself over until he can get back on his feet...no pun intended :) His mortgage is currently $900 per month. Am I missing something or is this a win, win? I just want to make sure I'm not overlooking anything. Any advice would be greatly appreciated.
Most Popular Reply
It may be a win-win from a sense that you stabilize the housing and finances of your family member and in return you get your first investment property, but this just looks like a bad opportunity for you. The rent is way too low for the price you are purchasing the house for. Even if you took it over for the remainder of the mortgage ($72k) and your family member breaks even, you'd still have to charge north of $700/month in rent and that's really in a best case scenario (i.e. low maintenance, low property taxes, etc.) However, it's likely you'd need much more than that on a monthly basis to make this a viable investment. Hopefully other forum members will be able to identify something I'm missing but it doesn't look good at first glance. Best of luck to you and your family.