In need of advice for helping my parents

[Blake Pedersen]

Hi everyone, I'll try to keep this short. I appreciate anyone who takes the time to read this:

My grandma owns a property with a few rentals on it. She's a very stingy person and refuses to properly maintain her properties. Instead of fixing things the right way, she always turns to the cheapest band-aid fix. She's been doing this for about a decade, so every unit is in a state of obvious neglect. She always keeps damage deposits regardless of the condition of the units, she lives on the property and is very nosy with what each tenant is doing at all times, she's basically a nightmare landlord and someone else needs to be running this place.

My parents collect rent, find tenants, and perform these band-aid fixes for her since she's too old to do any of it herself and won't pay for someone else to do it. They've been doing this for many years in exchange for the rentals when she passes. However, my parents have gotten sick of running my grandma's slumlord operation. They want out, but if they leave they've wasted years of time and effort because they don't get the rentals. Right now they are strategizing on how to get her to hand over the rentals now so they can run them the right way and then just pay for my grandma's expenses.

So: what is the most cost-efficient way for her to transfer ownership of the property to my parents? My parents are worried about how it could affect their taxes. The property is mortgaged, my parents need to qualify in order to take over the mortgage right?

Also, what is the best way to finance all the rehab necessary? I'm thinking there's a good opportunity to do something with a refinance. The mortgage has $200k left on an appraised value of $300k. However, the property hasn't been appraised for over a decade. Looking at similar property sales around us, we believe the property could be worth well over a million. I'm pretty new to real estate finance so I'm not sure if any of this info is relevant, but I figured I would throw that out there.

If the proper route is a HELOC or construction loan, do you think it would be better to do that under my grandma's name (before she transfers ownership) or under my parent's name (after)? Does it matter?

I think this is an outstanding opportunity to increase the value of the property, increase the cash flow (every unit is severely underpriced because my grandma also refuses to increase rent), ease my parent's stress by making the rentals easier to manage, put an end to a slumlord operation, and transfer wealth down a generation. But we want to do it all the right way, so please I appreciate any advice you all have for me. Thanks for reading this!