Best way to assume ownership of parents rental

My parents are selling me their rental property with the contingency that we pay them $75k within the next five years.
They currently owe $48k on the home with a monthly payment of $300 per month.
The home is currently being rented by a section 8 tenant for $1,600 per month.
The home has been appraised for 200k.
My husband and I are trying to decide the best method for assuming ownership of the property. Our goal is to pull the equity to acquire more rental properties.

Here are the options we have came up with so far:
A. Purchase the home for 123k (48k+75k) then refinance to pull the equity
B.Purchase the home for 48k, refinance to pull the equity, and just pay my parents 15k per year

Any other suggestions will be greatly appreciated.

I’d try plan B if parents will go for that. That’s similar to them carrying the note.

It makes cashflow better because it keeps the payments down. Plus parents are easier to work with than a bank if there’s a problem (roof blows off and you can’t rent it for 6 months).

The problem with plan B is that because they will be financing the property you will not be on the note which means that you will not be able to refinance due to no “continuity of obligation”.

Why not purchase the home from your parents at what they owe, and then refinance in 6 months (required seasoning period) and pay them off then. rates are very low right now and you could get a great interest rate.

Why not purchase the home from your parents at what they owe

Isn’t that plan B?

Still no need to pay them off when you refi if they’ll take payments.

Although, paying them over time might affect any capital treatment of the income. Depending on their circumstances, this may or may not matter.


You are correct. Sorry about that. I thought you meant owner finance purchase. My bad.