Seeking Guidance on Financing and Structuring a Family Property Investment

[Raul Mena]

I'm exploring my first real estate investment and have identified a potential opportunity with my parents' home, which has a remaining mortgage balance of approximately $64,000. Due to their high debt-to-income ratio, my parents are unable to qualify for a new loan to purchase or refinance the property. Since I have the income and credit to secure financing, and already own a primary residence, they’ve proposed that I purchase the home in cash. The idea is to establish a repayment agreement in which they pay me back over 13 years, with the goal of eventually reclaiming ownership once the full amount is repaid.

Legally, the home is owned by my grandparents, though my parents have maintained it for years and are listed on the title. One of my father’s concerns is the risk of losing the property in the event something happens to either of them, and this arrangement is meant to provide stability and long-term security.

As someone new to real estate investing, I want to evaluate all possible options before committing to any path. One alternative I’ve considered is having the home transferred to me as a gift. However, I understand that receiving the property as a gift may carry tax implications, particularly regarding the cost basis, which could result in a higher capital gains tax burden if I sell the property in the future.

Given my limited experience, I’m looking to fully understand the legal, financial, and tax implications of each approach so I can move forward with the best possible strategy.