Repay my mother or buy another duplex!

[Quwan Booker]

I purchased a duple thats is fixer upper! I be got to pay my mother 550 a/month for 5 years or 38000! I want to purchase other property ASAP. My stepmom told me I can give her $20,000 once I refinance the duplex and we can call it even! When I refinance the house I’ll be getting in the ballpark range of $30,000-$40,000. Should I give her the $20,000 or use the $30,000-$40,000 to purcharse another duple, and just continue to pay her the $500 for the duration of the 5 years?

[Janina S.]

Originally posted by @Joe Splitrock:

@Quwan Booker 

Not that it matters, but $550 for 5 years is actually $33,000 - still pay it off because a $20,000 loan with $550 monthly payment is a 22% interest rate. I am sure you can refinance into something way more reasonable so this is a simple math problem. Still as others suggested, being in debt to family should be avoided once you get going.

 Joe, I am pretty sure he said in his original post, that the agreement was to either pay her 38k or 550 a month over 5 yrs, but decided that if he paid her off right away when he financed, he could give her 20k and the rest would be forgiven. Sounds like his Mom isn't out to get him and isn't charging him interest, in fact either scenario (the monthly agreement or the lump sum) it seems like she is giving him a great deal. 

[Joe Splitrock]

Originally posted by @Janina S.:

Originally posted by @Joe Splitrock:

@Quwan Booker 

Not that it matters, but $550 for 5 years is actually $33,000 - still pay it off because a $20,000 loan with $550 monthly payment is a 22% interest rate. I am sure you can refinance into something way more reasonable so this is a simple math problem. Still as others suggested, being in debt to family should be avoided once you get going.

 Joe, I am pretty sure he said in his original post, that the agreement was to either pay her 38k or 550 a month over 5 yrs, but decided that if he paid her off right away when he financed, he could give her 20k and the rest would be forgiven. Sounds like his Mom isn't out to get him and isn't charging him interest, in fact either scenario (the monthly agreement or the lump sum) it seems like she is giving him a great deal. 

I don't think the loan amount was ever stated. That would be a strange agreement to pay either $550 per month or $38,000. That is essentially a $5000 penalty for early payment which makes no sense. It really doesn't matter, paying back $20K is way better than $33K or $38K no matter how you slice it.

[Chris C.]

Pay off of pay her monthly payments. It should be her decision. Maybe she wants to retire and likes the steady income. Or maybe she needs a lump sum for unexpected medical expenses. It should be her option

[Bo Goebel]

I’d do right by my family first, which means a detailed conversation with my mother that focuses on her situation and her wants and needs. If she truly doesn’t care, weigh your options. Are you going to use the money to invest further? Is the ROI of this investment worth the risk of using someone else’s money. Be a good steward of her money, and have her best interests at heart. There is no black or white answer- only a decision to make. I would error on cautious side (pay her back) when family is involved, but that is me.

[Jack Edgar jr]

@Quwan Booker

Ok it’s been some time now. What happened?what route did you take? Share with us your experience and how it turned out for you and the rest of your partners.