1st investment property w/parents as tenant. Tips, advice, ideas?

[Tracy T.]

Hello,  

I'm looking to discuss with others who have owned investment property where parents (or close family members) were their tenants.  Seeking others experience, advice around this   and lessons learned (e.g. lease, tax considerations, setup for future 1031 exchange).  I'm not concerned with issues of renting to family, etc. - more on ways that I should be looking at this as it is my first investment property.  

Here's the background:  My brother and I are purchasing a coop, fixing it up and then moving our parents in.  Parents have been renters all their life and we want to give them something better that finally is their own.  This will be a cash purchase with only my brother and I on title.  While this apt will provide a good positive cashflow if eventually rented to non-family in future, this was not the primary reason we decided to purchase (but of course needed to be in place).

We will not collect market rent, we just need to cover costs which will be half of their current rent expense.  While I've owned a home for the last 15 years, this will be my first investment property.  Would be very interested to hear from others that have followed a similar path and any advice they may be willing to share.  

Thanks for reading my post!

Tracy