Refinance before or after remodel on inherited house
Hello BP,
I have a tricky situation that I could use some guidance on. My family just inherited a house in Marina, California. This house was previously by my uncle and his partner both of whom passed away in the last 6 months. The house was purchased for $476,000 in 2008. There is $7,700 in equity in the house and there is about $330,000 still on the loan. The house right now is a SFR (3 bed, 2 bath) and the value that I have found online range from $373,000 to $511,000 but generally seem to be close to $450,000. This house needs new flooring, a new toilet, minor cosmetic upgrades, and the backyard needs to be completely rehabbed. Additionally, there is a back house that was in the process of being remodeled. It is basically a studio apartment with a working bathroom but no kitchen. We want to rent the house out and already have a potential renter. My first question is should we refinance now or wait till after its is remodeled?
One problem here is that the house was owned by my uncle and now is owned by my mother through a transfer on death deed. However, my uncle didn't have a chance to transfer the loan to his name before he died. So the loan is in his partner's name and owned through a different executor. We've spoken to a lawyer about this but he was almost as confused as we are because apparently this transfer on death deed is very new.
The second part of this is about the renter. This renter was renting from my uncle's partner but the house he was staying in is being sold. He wants to move into this house we inherited. He is known through my uncle's network as a good renter (never missed a payment, has been renting there for 8 years, and does repairs on their other properties). He offered to remodel the house for free in exchange for a discount on the monthly rate for the duration of the repairs. The house as a SFR could rent for $2,600. We would discount rent to $2,000 for about 6 months. Is there a way to do this and legally protect ourselves? Or is this just a huge risk?