Want to begin landlording... can parents buy house?

[Patrick Hepner]

Greetings, first post here!

Let me be clear that I have no properties currently and am still in the learning stage of real estate investing.

Having said that, I have a question:

My mother has offered to our (wife and I) first property. She isn't even worried about getting money back (she's looking at it as a forward on inheritance). So if she buys it, how does it become ours? I understand she could purchase it without a loan, but then does she transfer it to me? Certainly there are some tax implications in doing that that might just outweigh getting the loan myself. That said, could she just sell it to me then at an interest free rate? (I know that if she sells it for a dollar I pay big taxes for the gains) Any help is appreciated but please provide details.

[Derek Smith]

It sounds as if one way or another you'll eventually end up with the property in your name. However, if you want to speed the process up, here is what I am currently doing. Now let me state first, this is an option I have in AZ so I am not sure if it would apply to PA, although I see no reason why it wouldn't.

Similar situation, my parents bought a "2nd home" here in phoenix that I currently reside in. They have no plans of occupying the condo, yet the loan is in their name. In order for me to ascertain the property I must first ADD my name to the DEED. You can either do this at closing (which is the quickest/easiest way, because you're already there signing docs) or you can do it further down the line. Its a rather nominal fee to add yourself to title.

If she happens to get a loan for it, in as little as 6 months you may do a refinance to drop your mom off the loan, if you qualify. Otherwise, you can continue living their until you're capable of being financed to do so. If there is no loan, she can simply sell the property for "love and consideration" in the amount of $10 (or some other small amount), which you'll see often when real estate is being gifted.

I've worked out an agreement that my parents will stay on the loan for 2 years before I refinance the loan (solely on my credit) to remove my parents gaining full financial and ownership responsibilities.