How can I best use instant equity?

[Matt Weeden]

My wife and I are considering purchasing our first home from a family member in the area (Charlotte, NC). This family member is willing to gift us equity. Their goal is to downsize and walk away with around $10k to transition to a new place. Our goal is to repair and renovate the home within the first couple months of purchasing. We would like to live in the house as a primary residence for at least a couple years, with the potential to rent it out after that until we sell it.

The home had a recent tax assessment of $257k, but recent sales of the exact same model have been in the $290k - $313k range. It's currently in need of a lot of work, we estimate around $30k - $50k of required repairs and my wife wants to do at least $30k of renovations. We haven't had it officially appraised yet, although I'm scheduling an appraisal for next week.

The payoff on the current mortgage is $120k.

I'm having trouble wrapping my head around the best way to structure the purchase to accomplish our goals, or if this is even a good opportunity or not.

Any advice, suggestions, or pointing me in the right direction would be greatly appreciated.

Thanks,

Matt