Need Advice on House Transfer

[Marty N.]

Hello, everyone. I have dabbled a little in the past in real estate, so not a complete newbie. Still would like some advice from seasoned investors, as I look to ramp up my activity in REI in 2015.

My mother, who is in her 70's, is wanting to move back home to Kansas. She owns her home here in North Texas free and clear. It's probably worth about $140,000. She does not need the cash out, and upon her death, my sister and I would inherit the house. My sister lives out of state, and the house is about 3 miles from me, so i plan to use it as a rental property, and will likely rent it to my mother in law. So, this is a good situation for me.

I have several questions:

First, what is the simplest way for my mom to transfer the home to me? A quit claim deed? A warranty deed? I have seen several of these on legal forms websites, and wonder if it is that simple? Just create the form, sign it and get it recorded at the county office? Or should there be more involved, like using a real estate attorney?

Second, my mom is going to owner finance the home for me with no money down. Probably something like $130,000 purchase price at 4% for 30 years. My calculator tells me that is about $620 per month. Add taxes and insurance of about $350 and I'll be at about $1,000 per month or less. We will rent to my mother in law at something close to that. Maybe $1,100 just to cover any maintenance/repair issues. (the house is only about 6 years old). Market rent for this house would be about $1,400-$1,500 today. Upon my mother's death, half of the balance remaining on this note would be due my sister as her share of the inheritance.

My mom is fine just doing a promissory note with me and not recording a lien on the property. This would allow me, should I choose to do so, to borrow against the equity, perhaps to provide cash down or rehab on another property or two. The payment to my mom and one potentially on a cash out refi would not be a financial hardship for me from a cash flow perspective.

So, am I missing anything here common sense wise or, more importantly, legally? Just trying to think through this and make the most financially of this opportunity. Any advice on how to maximize this as a tax writeoff and utilize the equity in the home to my advantage would be much appreciated.