All Forum Posts by: Joseph Julian

Hey BP community,

Looking for some insight on a strategy my wife and I are putting in place to help her mom, preserve a family property, and build long-term wealth in the process.

Background:

My wife’s mother owns a home in North Carolina that she purchased years ago for about $90K. It’s now worth close to $300K, with ~$60K left on the mortgage. We’re stepping in to pay off the remaining balance and plan to structure it as a loan from us to her mom, with small monthly payments (around $500/mo) going back to us.

Here’s the plan:

• Pay off the mortgage entirely using our own funds.
• Transfer the deed into our NC-based LLC that we’ve formed for holding real estate.
• Formalize the loan agreement so her mom repays us over time while continuing to live in the home.
• Eventually convert the property into a traditional rental when her mom moves out or passes.
• Possibly tap into the equity via a HELOAN or cash-out refi to fund improvements or future acquisitions.

This home is meaningful to the family, but we also want to be smart about using it as a stepping stone for broader real estate investing. Our goals are asset protection, long-term appreciation, and eventually cash flow once it transitions to a true rental.

Questions for the Community:

1. Is it reasonable (and legal) to have her mom repay us for the mortgage payoff via a loan agreement while she remains in the house—even though we’ll own it via our LLC?
2. Would it be smarter to hold the property in a trust rather than the LLC for long-term family legacy and estate planning purposes?
3. Can we deduct expenses or improvements made on the property even though it’s not technically a rental yet?
4. Has anyone structured something similar with a family member paying below-market rent or repaying a loan while you prepare a home for future rental use?
5. Any pitfalls to watch out for with tax basis, depreciation, or gift/estate complications down the road?

We’re committed to doing this right. We want to help her mom stay in the home she loves, while also turning it into a generational asset under a smart structure.

Appreciate any insights or shared experiences!

@Glenn Smith I would first determine what your goals are—both short and long term. There are benefits to both approaches, as well as tax considerations. Could you elaborate more about the opportunity, or are you speaking hypothetically?