Buying from sister and owner rent to own to brother for profit.

3 Replies

My sister is in possession of my late grandparents home. My brother has always had an attachment to this house so it has tons of sentimental value to him. My sister told him she would sell it to him for $35,000 (valued at $76,000). But he isn't in any position to come up with that amount and my sister isn't willing to rent to own. I offered her $21,000 cash and to my surprise she agreed. I would love to keep the house and add to my rental portfolio but I know my brother really wants the house, so I told him I would sale it to him for the same $35,000 that my sister was willing to sell it to him for. It would be rent to own with 6% apr and 8 year term the interest is going to bank not me I would get my profit off top and he would be repaying the loan. Plus I am giving him a little allowance to do a few repairs. Being that this is family how do I handle the management aspect of I remove myself from the payment collection process and let a management company handle it, or do I manage it like I manage all my other properties all by myself. I just don't want to have to evict my brother if it comes down to it.

Hey @Marquis W. If you never lived in the house, be sure to abide by all the Dodd-Frank compliance paperwork to keep yourself out of trouble, if applicable. You'll also want to make sure an 8-year balloon is allowed under D-F, given your circumstances.

Lastly, I'll just point out that mixing business and family rarely works out. At very least, if you are not prepared to evict, you probably shouldn't be managing your brother yourself.

i would never mix business and family. Bad idea. Find him another property . Structure him a great deal and assign it over to him. That way yoir hands are clean. 

I disagree that it's a bad idea to mix business and family.  Just be prepared to lose money and to be ok with it (that second part is key).  If it all goes south, are you ok with that and will you let it affect Thanksgiving dinner?  If so, don't do it.  If not, go for it.

Clearly this particular investment is more emotional for you than business.  That's not necessarily a bad thing, just adjust your expectations accordingly.