Partner's parents offering rental as gift to sell for new home

[Ben Weis]

i’d love some help with my first time homebuyer situation.

i’m engaged.

we live in oakland california

my partner’s family is in the bay area. they own several rental properties.

they have offered one of their rental properties for us to use as a leg up to buy a home in the bay area.

i know very little about home buying and we’ve heard there’s a few strategies for making the most of this gift.

i’d love to know more about what you all know about how to get the most out of this situation. i’ve done some research on 1031 exchanges and we’re learning more about what kinds of entities we might need to set up. we’re very early in this process and any advice would be greatly appreciated. thank you in advance, happy to give more details if that helps.

[Michael Strachan]

Congratulations, that's quite the engagement gift! I would say that what you do with it depends largely on you and your fiance's particular real estate goals. It would be very helpful to know more details about the property, such as current value, current equity, whether it's a single family home, duplex, triplex, etc. Personally I would not recommend worrying too much about entities considering this would be your first property. Often times it overwhelms people unnecessarily when they are beginning their real estate journey (I am not a legal professional so take this with a grain of salt). Some of the main strategies to consider would be:

Continue renting it out and collecting the passive cash flow while also benefiting from the other wealth-generating benefits of owning real estate. 

Live in it and eliminate your housing expense, which can be a very good strategy for rapid wealth creation. If it's a 2-4 unit property you could live in one unit while renting the others (house hacking as it's called in this community).

1031 exchange in to a new property which can be a huge jumpstart into home ownership in a high cost of living area like ours.

I am actually a realtor working in the Bay Area, so if you have any questions about our local market or would like help putting together a game plan, I would be happy to meet with you. Good luck and happy investing!