Handed down house and what to do?

[Jack McWatters]

Here’s a predicament. My grandma passed away recently, and left her house. Her house is in theory getting sold by my dad and his brother who has 50/50 in it. The house is in Phoenix Arizona and averages out at 220k and there’s about 100k left on the loan mortgage 900 a month. What I want to know is if there a way to refinance and cash pull money out of it since there is an appreciation value since she purchased it whenever she did. If this is a possibility would it be worth it to purchase my dads brothers half and convince my dad to do the refinance and then rent it out? 3 bed 2 bathroom. What would be a smart play or should I just forget about it and let them sell it and make whatever they make. HELP FAST

[Greg Scott]

You haven't mentioned what this house could rent for so it is hard to say if this makes any kind of financial sense.  This looks like it will be more out of pocket than I typically like, but it could be worth it if the cash flow is high.

Assuming it does, here is how you could do it:

1) Buy out your brother's half for $60K

2) Get a cash-out refi with both you and your dad on the mortgage.  Based on the numbers you have given, you can probably take out about $60-70K

3) Use some of those proceeds to rehab the property.  It is probably not in rentable condition now.  For argument's sake, let's say you need $20K worth of rehab

4) Open a bank account for managing this property, and put about $10K in there for emergency repairs

5) Split the leftover funds with your dad and lease out the property

Of course, before you start any of this you need to hammer out a partnership agreement with your dad so that everyone is on the same page and knows exactly how things are going to work.  That is the most dangerous part of the whole thing.