Condo situation w/ parents

[Jeremy Lee]

Hey guys,

Wanted to get some input on my current housing situation and what some options might be. Currently, my wife, son, soon-to-be-born-daughter, and I live in a 3bed/2bath condo (bottom unit) in the Northwood area. I went in with my parents on it back in 2007 - they own 75% and I own 25%. I want to start investing in real estate (in Orange County) and am considering duplexes/multiplexes for starters. 

I like where we live now and we have a nice arrangement with my parents but I don't know if I should relinquish our ownership/stake in the property and cash-out and just rent from them or if we should maintain the current arrangement. Basically, I'm paying them a low 'mortgage' on the 25% ownership per month which helps with our finances but I really need to make a decision to pay off the remainder of it or relinquish it. They intend to split their inheritance (which would include whatever % of their ownership is in the condo) three ways between my brothers and I. 

If we paid off and maintained our 25% ownership (or increased it by continuing to pay them per month), then we would essentially own 50% of it upon inheritance. From there I could buy my brothers out. This is long-term but not sure if that's really the best idea. As the family grows, our needs may also grow. 

On the other hand, relinquishing ownership would make things "cleaner" of course for that 3-way split, and would also allow us to cash-out and potentially use that money to reinvest elsewhere while presumably renting at the same rate we were repaying for our portion of ownership (this has yet TBD of course). 

I'm just not sure if there are any alternatives here or what the most 'beneficial' scenario would be in our case. 

Any thoughts/advice/wisdom would be much appreciated. 

[Natalie Schanne]

Jeremy Lee - My brother had a sweet deal like this with my parents and I resented him for it. Haha. Why would you want to give up a good thing for something uncertain?

Keep what you have. Use money you save to invest in the stock market or property and/or to prepare to buy the home from your parents/siblings in the future.

My parents financed the purchase of a $650k home for my brother and his pregnant wife. When my brother paid towards the monthly 'mortgage', he got a greater % of the house, but according to the contract he could pay nothing and effectively live rent free for 20-30 years. If he did, he would accumulate 0% equity. (It wasn't clear to me, but I assumed he would still inherit 50% of the house.) They lived there for 9 years and are raising two grandchildren for my parents. Unfortunately they're divorced now. Ultimately, I'm sure my parents didn't mind at all to subsidize their child raising. The home did not appreciate in value. When my brother and sister in law moved out, they cashed out his accumulated stake. I think he paid less than half of the mortgage payments over the period.

Ultimately, be so thankful for your parents generosity and help. They sound like wonderful people.