Advice on how to acquire a rental from my parents.

2 Replies

Any help will be much appreciated!   

Situation:  My parents own a rental property that they would like to get rid of in July of 2021.  The property is worth $155k per the comps in the neighborhood and they owe $70k on the home.  It rents for $1600 a month and the current mortgage is $600 a month on a conventional loan.   


I would like to acquire the property without a new loan. 


I have researched assuming a loan and it seems that you aren't able to do that with a conventional loan but you can with an FHA loan. I would love to assume the loan and then refinance after 6months or a year to cash my parents out of the home. I'm trying to figure out the best way to make this deal work while getting my parents their $80k, saving them on agent commissions, and saving myself some closing costs and a down payment, I'd also prefer to not have this affect my credit as I would like to purchase another rental using my credit and I'm not sure I would qualify for two more homes.

You can use Subject to, sometimes called "Subject 2"

You are basically transferring the liability of paying the mortgage from them to you, and after few months you can re-finance it. You can even rehab it a little to increase the value, and then refinance.

That way you are not using any down payment on the property and you are paying only these 600$ per month,.

Be sure to consult with an attorney about that.

@Justin Mizell

I would ask my parents to put me on title and in return I would pay them a lump sum, pay the current mortgage and in 6 months refinance the home into my name.

Or you could refinance in 6 months and pay them back this way if they offer a discount on the sales price.