Question about investment property

[amy g.]

My dad is in Hospice, and he giving away possessions and wanting to know that all of his final arrangements have been made.

 

He has a 3 bedroom 1 bath 1,000 sq ft house in a well maintained neighborhood which is right in between a very nice neighborhood, and a much less nice one.

 

He would like my sister who has never owned a house to have his to rent out and have as a fall-back security place to live. He told me to have it appraised, and let her get a bank loan on 1/2 the value to pay to me, then she would own it.

 

She is not certain that she wants it. The house needs a lot of work-painting, carpeting-new heater, wiring. With those repairs, it should be worth $70,000.

 

As is, it might appraise at $40,000. I have no problem giving her the house for $20,000. She could fix it up, rent it out, sell it when the market improves, or move into it herself.

 

She just isn't sure that she wants to do that, although it does seem like a once in a lifetime deal to get a house for $20,000.

 

If she doesn't want it, should we sell it As Is, or should Dh and I invest $5-8,000 to fix it up before selling, and then still split the purchase price 50/50? Dh and I have re modeled houses before. We know that we can do the work, and only pay for materials.

 

Dh and I are both careful with money. It seems counter intuitive to take a super low price (from a stranger) rather than do a little work and get more money for ourselves and for my sister too.

 

What would you do?

[Tap]

I would offer her 1/2 of the 'as is' appraised value. Pay her out right. Remodel it, then sell it yourself.

 

 

 

That way she can't change her mind 1/2 way through and want the house after you do all the work.

[i.love.lucy]

I would offer her 1/2 of the 'as is' appraised value. Pay her out right. Remodel it, then sell it yourself.

 

 

 

That way she can't change her mind 1/2 way through and want the house after you do all the work.

:iagree:This is tricky. What kind of relationship do you have with her. Will she see it as unfair if she turns it down but later sees you making a profit from it?

[Beach Mom]

First of all :grouphug: about your Dad. These are tough situations to go through in life.

 

What we did in a similar situation was invest the money in the rehab, sell the house for a higher price and then split the profit. We subtracted from the sale our costs to complete the work.

 

I think the key is, whatever you decide, to agree and outline with your sister what the arrangements are. Better to be clear up front than have a misunderstanding later.