Rental Property Investor · Norman, OK · Member since 2018 · 158 posts · 529 votes
Hey all! A family member wants to sell two side-by-side properties and wants to know if we're interested. I believe they bought each for about $100,000 in 2020 (at those wonderful 2020 interest rates with conventional loans) and they're each worth about $200,000 now. We can't afford to pay out the $200,000 in equity upfront, but we don't want to involve a bank and lose the 2020 interest rates.
I know conventional mortgages aren't typically assumable. Should I be looking into lease options? Seller financing? Subto? Or is there another option for a sale within the family?
Realistically there are lots of things you could do; there are an unlimited number of options. The best path would depend on your relationship with these family members, the amount of trust between you, and who needs money and by when. If you have a low level of trust with these people, I wouldn't do the deal at all. (Nobody wants all future Thanksgiving meals to be terrible.) Even with a high-level of trust, I would get a full appraisal and inspections.
I think the simplest structure might look like this. Your family members gave you a zero-interest loan with a 5-year term, with you taking over mortgage payments, and quit claiming the deed into your name.
Thanks Greg! I have high trust with this family member, but we'll still definitely do all our due diligence.
Zero-interest loan with a 5-year term, with us taking over mortgage payments—Does this mean we'd take over the mortgage payments for five years before actually purchasing the property? Like a lease option/obligation with a five-year term?
Ideally, they'd get equity cash upfront, and we'd keep the low interest rate of their original mortgage. I'm trying to work out a scenario where both those things can be true.