Need advice on taking over a "free" duplex

[Eric M.]

Hello all.

A situation has come up and I need some advice from the experienced guys and gals on this forum.

My father owns a duplex (1/1 and 2/1) which he is currently underwater on. He is either breaking even or losing money monthly on it as my grandmother occupies the 2/1 and the 1/1 is rented out to a family friend.

The duplex holds some emotional attachment as it is my grandmother's home were we grew up in. She is in her 80s and I would like to see her stay there if possible. Also, my father is trying to retire and would like the responsibility of the duplex off his shoulders.

The proposal:
My father wishes to transfer the deed over to my name, if I want it of course. The mortgage would stay under his name. I would assume all responsibilities for the duplex as it would essentially be mine now.

The numbers:
- Mortgage, taxes and insurance come out to around $2,050 monthly.
- Approx $270k is owed on the mortgage with 21 years remaining.
- The property may be valued at around $190-210k conservatively. During the peak, which I know means little, the duplex was valued close to $600k.
- My grandmother would occupy the 1/1 for $850, which is low for a 1/1 in the area but it is what she pays now comfortably.
- I checked the surrounding area, which consists mostly of duplex or SFRs, and found almost no rentals to compare the 2/1 to at this moment. The ones I did find ranged from $1.5k to $2.5k but the higher rents were for 2/2 single families.
- The property is in the heart of a busy SFL city so the demand for rentals should be high.
- The property is slightly outdated inside and would need cosmetic improvements to the bathroom and kitchen as well as some paint.
- The roof is over 15 years old, but appears to be in good shape.

Basically, I'm seeking advice as normally I'd jump at the chance to own a duplex for no money down but the fact that the home is underwater sort of worries me. However, I believe I can generate a positive cash-flow of $300-$400 a month on the duplex which makes it seem a bit safer to me.

To sum it up, if I can help my father retire, while keeping my grandmother in her home, and not burden my family in the process, I would be happy to take the property.