Purchasing a rental property from your parents

[Brian Bauk]

Hello everyone, hope everyone had an awesome Thanksgiving. I’m very thankful for everything that I’ve learned from y’all!

My parents own a lake house that they see as simply just being a burden. There was talk in the family about selling it after we had an issue with the well system... but in general they are motivated sellers. I, however, think this place is a gold mine. It has a fantastic view and sleeps 10 people, all on an acre of lake front property. I’ve expressed interest to both of my parents as well as my other siblings as a buyer of the place and it was actually very well received. I’m the only family member that has any rental management experience, but this is a little different story than my typical small properties. 

Without going into super sensitive detail, I just cannot afford to put a normal 20% down payment on that house and I need a new solution. I’ve heard of installment land contracts and have been exploring that. However, I didn’t know the legality of renting out a property that I don’t have a title to (and yes my understanding of ILC’s is that the title isn’t fully transferred until after the debt is paid? Please correct me if I’m wrong!). For what I think this place would bring in annually, it looks like a great deal and I could start building generational wealth for my newborn. I just need to find that perfect arrangement. If you have any ideas or suggestions, or even criticisms in my thought process, I would love to hear them. 

Thanks, everyone. Happy Thanksgiving!

- B