NEED ADVICE ON BECOMING A INVESTOR AND I HAVE QUESTION.

[Darnell Moore]

HI..... MY AUNT WISHES TO HAND OVER THE RIGHT TO A HOME IN SOUTH JERSEY THAT MY GRANDMOTHER HANDED OVER TO HER. I WOULD LIKE ADVICE IN WHAT TO DO WITH THIS OPPORTUNITY. I WAS THINKING I COULD USE THIS  PROPERTY TO PROPEL ME INTO THE REAL ESTATE MARKET ANY ADVICE OR TIPS WOULD BE HELPFUL. I AM NEW TO ALL THIS SO ANY GUIDANCE WOULD BE APPRECIATE.

THANK YOU  

[Jon C.]

First, make sure the house is debt free. If there is a mortgage or any liens on the house then you will be the new owner of those liens and the lender on the mortgage will have the right to foreclose because it was a fraudulent conveyance. You also want to make sure there are no open permits on the property. Get a basic title search from a reputable title insurance company. It will cost a few hundred dollars. 

If there is a mortgage, you will need to get the lender's consent to assign the mortgage to you, or you will otherwise need to refinance the property and simultaneously convey the property from your Aunt to yourself by a "no consideration" deed. 

Speak to your accountant about the potential tax consequences of this transfer. If your Aunt remains on the deed with you then you will not be able to claim a stepped up basis and will be subject to larger capital gains taxes when you go to sell because the profit will be based on the value of the house at the time she originally took title.

In reality, all of the above is very minor stuff to work through in order to get a house for practically nothing. Potentially, you could do a cash out refinance while the rates are at record lows and either use the cash to fix up the property and get it rented (let the tenant pay that mortgage for you), and/or use the money toward a don payment on your 2nd rental property.

Good Luck!