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Updated about 9 years ago on . Most recent reply presented by

Account Closed
  • Billings, MT
1
Votes |
2
Posts

Buying out In-Laws Property Rental

Account Closed
  • Billings, MT
Posted

Hello,

First off, brand new to the forums. I have poked around here some, and it seems like a great community. So to get to it, my wife and I have started looking into buying rental property. We've some research but haven't gotten very in-depth at this point. We're a little fearful of pulling the trigger until we know more, but I had an idea that might ease us into the rental game.

The idea that came to me recently involves my in-laws. They lived in San Antonio, TX for many years then moved up here to Montana. They kept their old home and started renting it out. The thing is, they are still paying down their mortgage on it and the rental income doesn't even cover the mortgage payment. It's a money suck for them at this point. For whatever reason, they never bothered to refinance it either and have a 6.25% interest rate on it.

So I thought I might kill two birds with one stone. We would buy the house from them (we would finance it at a much lower rate). We know they've recently made updates to it, have good tenants and it would be a positive cash flow for us based on my calculations. This would also take the burden of their mortgage away, plus management fees, etc.

Their trepidation to selling is capital gains/depreciation recapture. I was thinking it would be easier to just pay off the $40,000 they have left on the mortgage and somehow assume the deed, but between gift taxes or what have you, doesn't look like there's a way around this. 

Any advice? Is it worth trying to do?

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