I need some great advice from creative thinking investors on this issue.
My dilemna: My mother(71 yrs old) owns a home in Tennessee that is worth $175K. The mortgage(BOA) balance is about $80K, so she has close to $100K equity. The PITI is about $720/month. As long as she has this payment, she cannot retire. I am trying to concoct a way to take the home(sub 2, etc), treat it as a rental, and rent it back to her, if you know what I mean. That way, I can afford the home due to the tax advantages of rental property.
I could sub 2 but am leary that the DOS would be initiated. If that happens, what is the recourse?
Im kind of confused about what benefit there will be in doing your plan. If you take it “subject 2” and rent it back to your mom she will still owe the $720 per month and the loan will still be in here name. Either you or your mom is still going to have to pay that. Then if the bank does call it due your mom would be obligated to pay the total $80,000 and if she cant afford that…now how can she retire. Not that the bank would call it due but it is a possibility. If you want to take that approach you should just assume the loan so that it gets out of your moms name. Then she can still live there and you would be obligated to pay the loan.
I would rent the home back to her at a deeply discounted rate($0).
Of course, I could always keep things as is, and simply pay her mortgage each month. However, I cannot afford that kind of negative cash flow without some means, via tax advantages, to lessen that negative.
You mentioned that I should just assume the loan. Are you saying that I should contact BOA and ask them to either transfer the mortgage to me, or add me to the existing mortgage? And then do a title transfer?
I was suggesting that you could try to transfer the loan in your name so your mom could deed you the property and she wouldn’t have to worry about the loan being called due like she would if you took tittle “subject 2”.
There would be transfer fees and the bank would check you out just as if you were applying for a loan.
How about if the two of them created a Land Trust put the title in the trust.
Each of them would have a beneficial interest in the trust, but since the title went into a trust and the mom is a beneficiary, there would not be any big fees or taxes. The son could make the payments through the trust.