My plan is to buy the house subject to their existing mortgage, renovate the property, refinance it and pay off their remaining loan balance using the money from the cash out refinance.

But timing and planning are crucial.Here's what you need to consider:Future Passive Income: Do you expect to generate passive income from other sources?

If it’s an older property or has deferred maintenance, you might want to lean toward the higher end.When it comes to CapEx (capital expenditures), planning for major replacements like roofs, HVAC systems, and appliances is key.

Assets identified in this study include:Standard windows and doorsInterior ceilings and wallsBasic plumbing and electrical systemsBuilding structural elementsBasic HVAC componentsThis engineering-based cost segregation study included the following methodology:Physical Inspection through a site visitDocumentation review including architectural plans, accounting records and construction documentsA cost analysis which utilizes engineering principles in order to allocate costs to their applicable asset classificationsCalculation of the depreciation schedule using MACRSAs a reminder, bonus depreciation started to phase out in 2023.

If you are going to be an owner-occupant, want a low down payment, and are planning to do a renovation, the FHA 203k and Fannie May Homestyle loans are your best optionsHow do you know the property is currently upside down on the mortgage? 

Also, make sure that they have money in their accounts in case things don't go as planned.

•Contractors (especially if you plan to add value).

Are you planning to rent it out or live in it?

I didnt mention I already have a trust and yes the plan was either to put those in the trust.

I haven't seen anyone ask if you are planning on self managing.The investors that I work with now find the hybrid of the two a better place when they are just starting and growing.