Probate Scenario. please help

[Michael Landrum]

Hi, I wrote a post about this scenario before and got some good advice but now I have a few more details and an idea that I need feedback on.

Here's the situation: my brother and I inherited a house late last year, with 2 family members already living in it. (my brother, myself and the relatives are all on good terms and the inherent risks with renting to family members is not exactly what I'm posting here for). We all agree that my relatives will buy the house as soon as we can make that happen, problem is, she has no credit and has a very hard time getting a loan.

Here's what we all want:   My relatives/tenants want to buy the house asap because they don't want to waste time and money by renting.   My brother wants to be cashed out. He wants his half of the money that we agreed we would sell the house for, and then sign a quit-claim deed or whatever other paperwork is necessary so that his hands are completely washed clean of the whole thing and he can just move on.    I just really want an income stream. Ideally, I would like to get my half of the cash as well and go reinvest it into a cash-flowing property, but am also willing to seller finance my half of the house (after we pay off my brother some how).

Here's my idea and I need to know if it's first of all legal, and second of all, smart. (I'm in a hurry so sorry for lack of detail).

Idea: Take a mortgage out on the house (BECAUSE IT IS CURRENTLY FREE AND CLEAR),  pay off my brother and myself, and then have my relatives pay off the loan and then "gift" them the house at the end? Is this a viable option?

[Natalie Schanne]

Michael Landrum - Consider the reasons why your cousin cannot qualify for a loan. Do you want to risk paying for her to live in your house for free while you cash out your brother?

Evaluate if the house is worth more than $45000 or if that's fair. If it's worth more, why wouldn't you sell it on the open market?

Option 1) Get a 20,000-22500 loan to pay off your brother's stake and get the title in your name, then sign an official installment sale (lease to own) contract with your cousin. She must give you a downpayment (more than a normal security deposit). She must give you monthly rent on the first (schedule your mortgage loan payment on the 10th).

If she defaults on paying you, serve her notice and evict her. Keep the downpayment. Sell the house.

Option 2) Convince your brother to go half and half with you on the lease to own contract. You each get paid 50% of the agreed 'rent' monthly. $45000 over 5 years without interest is $750/mo. Over 7 years is about $600/mo. Charge 5% interest minimum.

Option 3) Apologize to your cousin and list the house for sale. Pocket half the money with your brother. Call it a day.