Purchasing Real Estate from Immediate Family Advice

[Ryan Cramer]

My wife and I recently relocated from New York City to Olney, MD.  My aunt passed last year, and my two cousins inherited her 5 bedroom 2.5 bath house.  They were kind enough to allow my wife and I to move in to the house rent free for the time being while we get on our feet here.  Our original plan was to stay here for about a year, then buy our own house hack in Baltimore.  However, my wife's new job is in Reston, and the commute from Baltimore to Reston would be horrendous - so we are considering staying in Olney.  And we are considering purchasing this house directly from my two cousins.

The caveat is we could not afford this house at its market value with a traditional mortgage.  It appraised for $665,000 and I think realistically the most we can afford is $450,000.  But we really love being in the house and this area.  I think my cousins would like us to stay in the house so they can also continue to visit and use it, but also want to make the money off of the purchase.  So I am looking for advice from the BP forums as to how we could creatively finance / leverage this deal in a way to make it financially work for my wife and I and get our feet in the door to start buying investment properties.  From what I've read online, purchasing real estate below market value from family can be complicated in terms of taxes, lenders, etc.  I only want to pursue it if it wouldn't hurt us financially and would allow us to put our saved capital toward a rental property.  Does anyone have any advice for how we can go about this?  Is it a bad idea for us to try to buy this house?