Options for house inherited by multiple siblings

[Neil Smith]

My mother-in-law passed away not long ago.  Her house, which is paid off, was left to her three children.  My wife is the only one of the three siblings who is able to buy out the others if she so desires.  My wife and I are exploring options for keeping the house.  Below are a few of the options we are looking at.  I am requesting suggestions and comments on these option, as well as, other options we may not have considered.  Any info is very much appreciated.

1.  Buy out the other two siblings.  Leave my wife's financial portion in the house and rent it out.  This is assuming we can get the house to cash flow.  

2.  Buy out one sibling and have the other move into the house.  This one is a bit tricky, but could be a good option if the details could be figured out.  The first sibling would bought out by my wife using a bank loan.  My wife and the second sibling would leave their portions in the house, thus keeping the payments as low as possible.  The second sibling would move into the house and make payments on the loan my wife used to buy out the first sibling.  This seems great since the second sibling has been renting all her life and is not financially able to buy a home.  She is also on Section 8.  My wife and the second sibling would be partners on the home.  This is where it gets tricky in my mind.

          A.  What happens if the second sibling moves out?  What portion of what she has paid to date would she be entitled too?

          B.  Who pays for maintenance costs since the second sibling is essentially renting a property she owns?

          C.  How is the profit sharing established and to which amounts?

3.  Sell the house and use the money to invest in a different market than Salt Lake City, Utah.

Thank you for your thoughts

[Ryan Davies]

Sorry to hear about the mother in law, I'm sure that is hard on your wife. I live in Utah and I'm a real estate broker and mortgage broker here! I wouldn't touch option 2 with a 10 foot pole personally since I won't rent to anyone that I personally know. I would buy them all out and keep it(depending on cash flow, how they are determining value, specific property details, etc.) OR sell and take the cash to buy 2-4 properties instead of everything being in one since you most likely have a step up in basis taxwise(chat with an accountant).