Deal Analysis

[Yul G.]

Hi All,

Became an instant fan of this place soon as i stumbled into it and have already picked up a vast amount of knowledge. I wanted to present a situation I am currently going through to see if I could get some guidance as far as what direction you all see fit.

I currently have a rental property that I originally purchased FHA, lived in for a year and am now renting out to tenants. The property is mortgaged at $119,500.00 @ 4.875% and the PITI is $940.00/mo including the $90.00 MI payment. Property is assessed at $150,000.00
Currently renting for $1,250.00 per month to a great tenant.

My sister has a property mortgaged at $ 65,000.00 @ 4.275% with a PITI $520.00 under conventional non-owner occupied. Property is assessed at $145,000.00. Rents for $1,200.00 per month so cash flow is steady.

My father has a property that he is having a difficult time making payments on. his 1st mortgage was for $ 256k and he had a second for $ 102K. However, we negotiated on the second and it has since been wiped away. So the current standing on the property is a PITI of $ 2,200.00/ mo on a mortgaged amount of $ 256k however the property value is around $330k.

Our intent in order to help my father out was to refinance MY property from FHA into conventional, and at the same time I would purchase my sisters property from her for $110K with a gift of equity as remainder. This would give us about $40k in free cash that we would then re-invest into the bigger mortgage of $256k that is currently under my parents name purchasing the house from them for $215k and doing a gift of equity on the remainder of the properties value transferring ownership from parents to my sister but lowering the PITI to a reasonable estimated payment of about $ 1,200- 1,500.00 per month. The purchase would be made via FHA with my sister as owner occupant and myself as non-owner occupant since I will be helping with income qualification.

Am i misinformed on how the gift of equity can be used, and does anybody see any flaws or other suggestions that they feel will be more appropriate to this situation. If there are and key points I left out I will glady provide.

Thanks to all and I am anxious to hear back from all of you.