Buying a property from family member

10 Replies

A close family member wants to sell me and my brother in law his property and only wants 30k in cash and we assume the mortgage. Would it make sense for him to add us to the deed and we refinance him out 6 months later?

@Juan Chavez I believe the answer to your question will depend on your family member. Do they want to go through the process of adding you to the loan then refinancing out later?  It's not hard to do. 

Also, if they are going to be hands-off once you take over and you somehow default on payments, the family member may also be negatively affected.

Best of luck!

@AJ H. He’s 100% onboard with this I’m just curious if this is the most efficient way to do it in terms of ease and money. I’m assuming we’ll also save in property taxes since we’ll be refinancing the property not purchasing it. I’m assuming we’ll have to wait a few months after being added to refinance.

@AJ H. just noticed you’re an investor in Virginia. The property we are looking at is in Hopewell, Virginia. Any thoughts about converting this to short term rental or would long term rental be the best fit in the area? Thanks!

Sounds like a hokey deal and there are a lot of 'what ifs' and risks that could result in attorneys, courts and a lot of legal costs. I never heard of a bank adding someone to a loan after the loan has been processed and funded. The seller cannot remove his name from the first lien position on the property without paying off the loan  unless that is stipulated in his loan agreement and you can bet your $30,000 that it is not. If the owner does enter into any type of contract with you where a Quit Claim is filed there is the possibility the bank could Call In the loan meaning everyone who has an interest in the property is in a jam and if you don't qualify to get a new loan then everyone is screwed.

The only way you can do this deal is through an attorney and a real estate broker is probably your least expensive and best bet.

Originally posted by @Juan Chavez :

@AJ H.just noticed you’re an investor in Virginia. The property we are looking at is in Hopewell, Virginia. Any thoughts about converting this to short term rental or would long term rental be the best fit in the area? Thanks!

I am in Northern VA, so I am not familiar with Hopewell. However, it is near Richmond which is a very good and competitive real estate market.

Best of luck!

Hi Juan! I'm an agent in the central VA area, and based on what I know about Hopewell, I think long-term rental makes more sense for that market. You could potentially try to tap into the military folks passing through Fort Lee.

They say never do business with family, but when opportunity knocks.... I would want my name on the deed.  Security for you, and he can't just sell it to someone else down the road. Protect your self and have it in writing. And I believe a refi cash out later, would be easier too.

Hey @Juan Chavez ! I won't try and advise you on the best way to finance this deal, but if you go forward with it, I'd be happy to talk about Hopewell. I have owned and managed a rental in Hopewell for 3 years, and am a realtor in the Richmond area. I have heard of successful STRs in that area, but there's not a lot of tourism or travel to that area, aside from mid-length stays from the Army at Fort Lee. I'd more seriously consider getting it rent ready for long-term rentals. 

@Brandon Spurlock thanks for your input! I was definitely thinking it’s not the best location for STRs, but I did pull some Airbnb data and noticed some successful ones in the area, but not many.

Any recommendations for great property management companies in the area?