Need advice on what to do with property

I need advice on what to do in this situation. My grandfather owns a house that needs a lot of work. Needs about $100,000 in work. The ARV is around $400,000. He has heloc open and owes $27,000. He wants to get rid of the house ASAP. He wants me to buy it from him but i can’t get a loan. My questions are: can he deed the house to me with heloc open? Can i get a heloc to fix it up if he deeds it to me?

Hi @knb901. Curious, did you ever get this resolved?
Not sure the answer to that question. But if you cant go the conventional route, and you just want to buy it short term to fix it up, have you thought about using a Hard Money Lender? Fees are high but may be worth it in this situation if he can’t deed it to you with the HELOC in place.

Yes, your grandfather can deed the house to you with a heloc in place.

Keep in mind, that when you take title, the property taxes are likely to be reassessed, and depending on how long ago the property taxes were reassessed, you could be looking at a significant increase in the assessment.

The existing heloc could be used to fund all/part of the house repairs. ???

If there’s a lot of equity in the property, you might have your grandfather simply finance your purchase using an installment note, and agree to let you borrow a specific amount against the existing heloc, to make repairs.

Then, after a year, you can begin looking to refinance the house, to pay off your grandfather.

BTW, refinancing is MUCH easier than getting a new purchase money mortgage.

You’ll need to prove a year’s worth of on-time payments, and limit the cash out to 80% of the new appraised value.

Also, borrowing 80% (or less) of the appraised value, makes it even easier to get refinancing, AND there won’t be any PMI (Private Mortgage Insurance) added to the loan payment.

If refinancing won’t pay grandpa off in full, then you create a second mortgage in favor of your grandfather, for the balance owed (only after the refinance has closed, not before.) Some lenders will not allow seconds to be created concurrently with their loan funding. So you may need to create an unrecorded second. Then you just record a memorandum of agreement to protect grandpa’s interest and position.

If you’re going to flip the house, there’s probably no reason to take title.

Just create an option to buy, subject to your grandfather borrowing out the fix-up costs from his heloc; you doing the fix-up as a condition of the option; and then retailing the house, while keeping whatever profit you built into the option price.

Even though you’re dealing with grandpa here, you want to put everything in writing.

=== > Of course, the assumption here is that grandpa’s not a demented drooler, on the verge of hospice care, and you’re not setting yourself up for a nice case of elder abuse. Otherwise, why not just write yourself into grandpa’s will, and forge his signature using your left hand, and wait a week for grandpa to start his dirt nap. j/k ???

Otherwise, a consensus needs to be drawn among all the legitimate decision makers regarding this transaction, in advance, to avoid any accusations that you’re equity-stripping the grandpa that keeps asking everyone, “Who are you?”

That’s all I got.

The reply from Javipa was hilarious and so spot on.
Reminds me of a situation that my sister and brother in law got into. Russ my brudder in law one day tells me after I had returned from the islands, that he is getting a house for 40K that’s just around the corner from moms house. I knew these houses were going for 150-175K. He tells me it has a pool and needs a lot of work and the owner, an old lady just signed it over to them. I tell him there is just one problem, he asks what? I say it sounds too good to be true. He says oh no, its a done deal, we got it recorded and got the paperwork and everything.
My sister and Russ started fixing the place up and had agreed to let the old lady stay there. They even had the old ladies credit card and had purchased a lawnmower and other supplies. One day the old lady asks Russ who are you? She calls the cops and says there is somebody working on my house and I dont know him. Russ and sis get kicked out with all his tools still there. The District Attorney filed charges and they got out of it by hiring a lawyer. They then later purchased the same house for full price at 180K and it still needed 60K in work. They managed to get an adjustable rate mortgage, after awhile the property payments shot up to $1,800 a month. They talked my Mom into getting an equity loan and giving them 20 Grand to save the house despite everybody warning Mom not to. Then of course they still lost the house but stayed in it for a few yrs for free and tried to sue the lender.
Then when our Mom kicked the bucket, the sister with Russ on her skirt tails tried to take Mom’s house and the rental property and vowed to spend the rest of her life to ruin my life and take the properties even thou it was willed to me and our youngest brudder that has a learning handicap.
Within 2 years the evil bi-polar sister died a horrible death from 40 years of chain smoking and screwing people…
Now I’m still paying off the 20 Grand from refinancing this property.

It all sounds too crazy to be true, but it is.