Hey guys,
I'm in a pretty 'unique' situation with the condo that we're in now. It's in a relatively HCOL area (Irvine, CA) and was built back in 89' or 90'. I went in on it with my parents back in 2007 and the down payment down and my parents did a 1031 and rolled over an existing investment property sale into this one, essentially paying it off in full. At the time, we got in when the market was going up and before the bubble burst... not great timing but that's what it came down to at the time. Anyway, I've been sending small 'mortgage/rent' payments to my dad on a monthly basis ever since we got it but they're wanting to sign the property over to us in full as part of an early inheritance.
We'll just use some static/rounded figures here.
Condo purchase price: $515k
My down payment: $15k
My monthly payments: $700
In reality, I own a pretty small percentage of the condo (along the lines of 15% at this point in time). On paper, I technically own 25% of it but in order to actually get there, I'd need to send my dad somewhere between $40k-50k or possibly a little more.
Here's the tricky part: I have two older brothers with whom my parents want to split the inheritance equally between my brothers and I. Since I already technically own 25%, they would take the remainder and split that three ways. Basically, if we ever decide to sell the place, they'd each get 25% and I'd get 50% (including the 25% I already own). I'm not quite sure how it would work if we end up renting the place out, but I figure we could argue taking most or all of it since we'd be the ones actively managing the place. So the money will just "sit" in the property until it's sold. I believe the details of the inheritance split are in my parents will.
Now, the most unusual part of this is that we've all "agreed" that if we find another place to live, we could sell and use the proceeds to fund the new place. But if we ever sell the new place in the future, we'd still have to pay out my brothers their 25% each of the inheritance. So the carried value of the condo and funds is "locked" in a sense (I suppose we could "buy them out" but I'm not sure how this would work since it's all in the family... and we wouldn't be able to buy them out right now unless I decide to fold my entire taxable investment portfolio lol)
Another possibility we may be facing is to have my in-laws move into the condo if we decide to move out and find another place to live. That's still up in the air but is a possibility that would result in us not being able to rent it out at face-value (my in-laws aren't in the best financial shape especially). Anyway, that's another topic to think about...
At this rate, is it better just to keep it as an investment property, rent it out, and figure out the split (if any) that my brothers would receive as rental income? I think there were some discussions around doing it this way, and we talked about how we should be able to net all the rental income especially if we are the ones managing it.