Structuring a Deal to Purchase Parents' Rental Portfolio

[Jacob Polansky]

I’ve been buying, selling and wholesaling land and single family residences for a few years now, but I’m looking to transition more into investing full time ASAP. I’ve been self-employed for the past 10 years. I own a couple of food trucks and a small local restaurant. My wife is has been at her W-2 for almost 5 years. We currently have a little over $100k in savings which we are hoping to put to work.

My parents are now in their mid-60s and have owned around 20 rental properties in Central Texas for the past 30+ years. All were purchased with cash and are owned outright. Most of them do need repairs/updates, however all but 2 or 3 are currently occupied. After years of dealing with undesirable tenants for so long, and because of the outrageous increase in property tax here in Texas, they are now considering selling to ease into retirement. 

The demand for rentals in the area is high, as brand new schools have been built within the last couple of years. It’s a smaller town about 15 minutes outside of Waco, 1 hour from Dallas and 1.5 hours from Austin. There are 4 subdivisions in various stages of development (houses at $300k+), but there’s low inventory in the way of more affordable housing.

My question is: is there any way I could structure a deal here that would make financial sense for both my parents and I? I would like them to be able to make a good return on their investments, but I also don’t want to overpay. Any thoughts or suggestions on how to possibly approach this are appreciated!

[Dave Foster]

@Jacob Polansky, do not buy those properties from them now.  Enter into an agreement to manage them with the outcome being that you will inherit when they pass away.  You will have the opportunity to provide for them in their retirement.  In return they will be giving you properties with no deferred tax free and clear.