Buying Parent's House to Save the Farm (House Hack)

[William Richard Arens]

Hi all,

I am a 26 yr old prospective real estate investor. I currently make about 65k-70k/yr at my W2 and have run a small mowing company for the last 7 years which makes me another 12k/yr. 2 years ago I discovered bigger pockets and have been absorbing as much information as possible since then, reading every book they have published and listening to nearly 300 episodes of the real estate podcast and every episode of the money podcast. I have been implementing the ideas and currently hack my housing in an unconventional way (my girlfriend and I trade work at a farm in Northern Virginia in exchange for rent and board for her horse). 

I have been planning to buy my first house hack this year and have accrued about $20k to put towards this first investment. However, about 3 months ago, my parents dropped the ball on us that my father (previously having about $3million in savings) has only $10k left in savings after the business he has been investing in over the last 6 years has almost lost him everything. My father's company has been appraised at $70mil but it has obviously not worked out yet and I digress. My father doesn't make money outside of mowing for my mowing business and my mother only makes about $45k so they are unable to afford their nearly $4k/mo mortgage and are very close to short-selling their proper since my mother was just denied for a refinance.

My question and topic for discussion is as follows: My parent's 14 acre farm in Northern Virginia (Loudoun County) has a tax appraisal of about $700k. They currently owe about $325k on their first trust and another $50k on their HELOC for a total of about $375k. additionally, they have a 10 stall barn on the property and the entire family pays board to keep horses there (9 horses, 3 dogs and 2 cats on the property). I currently have a 760 Credit Score and $20k in savings. I have spoken to them about the idea of me purchasing the house and they have agreed to allow me to purchase the home for $450k and then sign a lease for $2000/mo for 2 years. If I were able to buy the house, I have told them and they have agreed that I will treat it like any other house hack. I will rent them the top of the house and I will live in the basement while renovating it. Then, after my 1 year requirement is finished, I will move out and rent out the basement to make the property cashflow even more.

Numbers:

Appraisal: +$700k

Purchase Price: $450k

Total Expenses: -$3425/mo

Estimated Principle & Interest: -$2000-$2200/mo

Insurance: $350/mo

Taxes: $500/mo

Utilities: $375/mo

-----------------------

Total Income (During Hack): $3000-3400

Total Income (After Hack): $4000-4400

Rent Income: $2000 for top & $1000 for basement after moveout

Horse Board income: $200/horse *5-7 horses = $1000-1400

So, by my math, I will be out of pocket about $400/mo to cover all expenses of the property. To me, this is very affordable and when you consider that it will cash flow between $600-$1000 after I move out, it becomes a self sufficient investment with a lot of equity. my plan would be the hold the property indefinitely and cash-out refinance it every 10-15 years (maybe even sooner for the first one since I am buying it for such a discount). 

My Questions:

(1) is this a good deal?

(2) should I be able to use the lease agreement with my parents for $2k/mo to count towards my debt to income ratio when qualifying for a mortgage?

(3) is there anything that will prevent me from buying a family member's house for a discounted price? (some law that prevents property from being conveyed between family members for below market value *even though they are about to short sell it anyway and they are dealing with debt issues and will likely sell it for cheap regardless*)

I apologize for the lengthy post and I appreciate anyone and everyone's input. 

Thanks,

Billy Arens