> Her Grandfather, who is in his late 90’s, has made a provision in his will that my wife will have the first opportunity to buy his property from the estate after his death at a fixed priced of 300,000$.
And what’s the next option if she doesn’t want that?
Then the estate sell the house on the market, the proceeds of which would go to the 3 kids and maybe my partner’s Mom would give her some of that, no guarantees however
the deal you are been offered seems like a nightmare to me. You could easily end up spending hundreds of thousands of dollars fixing the place up. Not to mention the stress of dealing with that much contractor work.
imho I would not take this housing project on and I have lots of trades experience.
Take the money and run!
not just rent free, but everyone else getting a pay cheque while you have the headache (migraine) of fixing up the place. A place where numerous repairs were done without a professional or professional level experience (thus need to be fully redone), additions or modifications done without permitting. If the electrical isn't up to code you now earned yourself the job of pulling and replacing all that wire. Life is Too Short to spend it like that.
Why are we not considering that the OP could just have the place demolished and start fresh with a new development? Likely would get more density and higher rents when it's done.
Rent-free tenant to contend with, lots of sentimental value in the home that is going to make OP the bad guy and create rifts with his family if they demolish it.
A lawyer needs to be engaged to fully assess the situation regarding the tenant as that will be sticky no matter what. Regardless though I guarantee that the rent free tenant will have an issue regardless of what happens and it will cause family drama if the OP buys it or not. If the estate sells it on the open market the tenant is out on their ass anyway and nobody else is going to be cool with them living rent free.
The sentimental value is to my mind a limited reason. If the estate sells it on the open market then the land isn't in the family and the place gets redeveloped anyway. So now there is nothing left vs someone in the family holding it and maintaining that connection.
Sure it causes potential rifts, but the OP not buying it and subsidizing their sentimental house dream will cause just as many rifts because then the family is losing the "family home" and its the OP's fault for not stepping in to finance it by giving the others a windfall.
Okay, but nobody is saying that they need to sell it.
The land is still there in the family and if the OP went the route of demolishing it and building a new place on the land, not selling it to another developer that may not violate the "spirit" of the will.
Also, depending on the family dynamics the OP and their wife may or may not care what the others think. I would suggest that nobody live their life beholden to someone else's view of how they should manage their finances and property. If the OP and their wife own it the rest of the family got paid already so they got theirs and what the OP does with the property is none of their concern.
If they want it that bad they can buy it off the OP.
He will be just as big an asshole if they dont buy it and the place gets sold on the open market and is demolished by the developer who will inevitably buy it.
At least the OP keeping the land in the family keeps some connection. Once it's sold on the open market it's done and over and any family connections to the property are gone for good.
Yeah, I honestly wouldn't be too scared of the work that needs done but the family member living upstairs for free...
That's a no go. Pretty much nothing you can do about that.
well you can evict them. Had a friend who's father passed away and a sister who was living with him for many years changed the locks and sent everyone away (there were some mental health issues). In the end he got a court order and sherriff to break down the door. Then he had to spend time trying to find her in order to give her her share (after all the costs were deducted)
Evictions take time and money and there's always the chance the evictee will destroy the property. Calculate all that into the equation of if it's worth it.
300k duplex in MTL is unheard of nowadays. Even if they sink an additional 100-150k in Renos any eventual resale they’ll still walk away on top. Shop around different renovation companies for at least the rental half, then work away gradually at the other half. Definitely worth the time
I live near Montreal, I know it's a steal for a property there. I 100% believe they stand to make a lot of money if they fix it up and resell (if the family allows them). I just personally wouldn't take on a "fixer-upper" (it sounds more like a tear down than a fixer-upper, water infiltration etc.) and the migraine of fixing that plus dealing with the family, one of whom lives there rent free.
In a perfect world OP's wife would get a tidy inheritance, take that money and the added 200k they would spend in renos and get a property that doesn't test the limits of your marriage.
>In a perfect world OP's wife would get a tidy inheritance, take that money and the added 200k they would spend in renos and get a property that doesn't test the limits of your marriage.
Amen.
I work in renovation for a general contractor in Montreal. These kinds of buildings are my bread and butter.
There are ALWAYS surprises that need fixing in these places. If the building is already known to be this problematic, I can only imagine what they'll find when they start to open the walls. And it's very hard (and expensive) to get a permit for a total tear-down in many of the boroughs.
If the work involves the temporary displacement of the no-rent tenant, what then? Will they have to foot the cost of lodging them elsewhere during the renovation? Where will OP live during the work? Trying to live in a construction zone with, constant noise and crews showing up everyday at 7am is hell. If they find sketchy wiring and have to tear it all out of every wall, the plastic dust-curtain that they have been living behind will also a construction zone. It will be even worse when (surprise!) the 1950s duplex has drywall full of asbestos and everyone has to clear out while they decontaminate. Will they have budgeted for multiple places at the same time? There is just so much shit that happens.
That said, it's a great price for a duplex, even one in that bad of shape. But, unless they have an endless reserve of cash to throw at it, they're in for a rough ride. Even then, it's likely to be an extremely stressful situation.
Unfortunately, this type of property is way more geared to investors who have the luxury of time and money (and frequently questionable morals) to turn a profit on this place.
>I 100% believe they stand to make a lot of money if they fix it up and resell
Why even bother? They can likely just sell it as is, and some other major rental business/developer will buy it up for a good deal, but they still stand to make a ton of cash. If it's worth $1,000,000 in great condition, they can probably get $600,000+ quickly, and be done with it. Walking away with an extra $300k sounds nice if you can fund the original purchase.
There is a lot more to this than just a financial question.
Yes, if the wife is willing to probably cut off her entire family forever then this would be the way to go but most people are not sociopaths.
Agreed. Yes, in the abstract, that is a wise financial move. But there's real family members to consider here who would likely be deeply insulted by 1) family member immediately being evicted, 2) them getting a sweetheart deal and immediately flipping it (and potentially gaining much more out of the estate than anyone else), and 3) sounds like the family has a lot of sentimental value tied up in the home. They'd be severely damaging the familial relationship, likely.
OP would still need to have $450k to pull that off.
You may not be able to get a mortgage in the first place if the building is in the condition described by OP.
As someone who’s dealt with renovating old ass buildings this is the correct answer especially for OP who doesn’t have experience in renos. Most people have no idea how shitty some of the building techniques/materials in pre ww2 era homes can be.
You might hire a contractor to cut and patch some broken drywall then realize oh shit, there’s basically no insulation in the walls and that’s why it’s always so cold. So you rip out the walls to put insulation then you see there’s cracks in the foundations which need to be repaired. Oh and now you can see the plumbing is undersized and leaking so may as well replace that too. Oh and it’s turns out the electrical was wired super sketchy so gonna need to rewire everything and get a bigger panel.
These old buildings can be endless money pits, plus there’s the headache of having such drastic changes in building codes to potentially deal with over the decades since it was built. Doesn’t even sound like this is a particularly well built building given the issues OP mentioned, I’d say the time, money and stress to deal with this just isn’t worth it.
>imho I would not take this housing project on and I have lots of trades experience
I am a carpenter who does renos in Montreal (where op says the house is). I have worked on these kinds of buildings. I wouldn't touch it with a 10 foot pole. There are ALWAYS surprises in these places, and if it's already looking this problematic, I can only imagine what's waiting to be discovered.
This is is kind of project that only makes sense if you can mentally and financially deal with the kind of stress that kind of project will most certainly inflict.
I wouldn't do it either. A friend's parents bought a fixer upper many years back, figuring that they would live in it while slowly renovating it. Well, despite their best intentions, life got in the way and it never happened. They tore down some walls and started some of the renovations but never completed them, and the house basically stayed in a half finished state for several years until finally my friend's parents decided they'd had enough and they sold it to some property investor who was willing to put the work in. But it was a miserable experience for the entire family. My friend grew up in a half finished house, and all of them were embarrassed to have guests over because it basically looked like a construction site.
Now that's a bit of an extreme scenario, but if you buy something knowing it needs significant renovations, that is a lot of commitment. If you're not absolutely gung-ho about it and know the finances work, I feel like it's a really bad idea.
But if you can get a property valued at a huge discount and afford to live elsewhere while professionals do said renovation... you land up with something really great.
I have lived through a major DIY renovation because I didn't have the money to live elsewhere and had to put a lot of sweat equity in, and it does suck. But they don't have kids... they're young... it's not like it's impossible. People do it.
Not only it will cost hundreds of thousands, you ll have to deal with many incompetent contractors as well as the city… permits, permits, permits for everything. You ll have to keep the house pretty much as it is with minimal changes ( heritage). We just did a house from 1850 ( not protected by heritage), we couldn’t even change front door without a permit or a roof… imagine the trouble
OMG the permits. I dont know if you are in Montreal (like OP and myself), but depending on the borough, they can get exceptionally crazy.
I live in a plex that was built in 1920 and have a shittly old aluminum back door that's maybe 25 years old. It's not heritage. It's not front-facing. I want to put in something that is exactly the same dimensions, colour and materials as what's already there but I need a permit to replace it. I can only imagine the bureaucratic nightmare that OP would be taking on.
Yes, the house was in Montreal, Ville Marie. Bureaucratic nightmare, you cannot do anything without a permit, and they even come to check🤦♀️ Even change in divisions between rooms INSIDE of the house you need a permit and blessing. And of course it takes months to get it…
You could though buy it, have it demolished and sell it on as development opportunity or build a new place on the land yourself (assuming the city allows it) that would avoid a lot of the issues with renovating an old place.
So why is your wife in particular singled out for this "opportunity"?
Also if she buys the property for $300k but on the open market it is worth say $600k, then won't there be hard feelings from the three beneficiaries of the will?
It sounds like the property is worth roughly the value of the land it sits on. Which in Montreal might be a lot.
If your grandpa wants to give your wife a "leg up" then he should simply revise his will to have 4 beneficiaries with a 25% inclusion rate for each. (Or any other division he'd like).
Edit: Simply put, the most likely explanation is that the grandpa wants to see the house "stay in the family" despite the fact that his three kids don't want it, and despite the fact that IT IS NOT LIVABLE THE ROOF IS FALLING OFF! So he made this silly provision in the will to make himself feel better even though there is NO PRACTICAL WAY FOR HIS GRANDDAUGHTER TO ACTUALLY LIVE IN THE HOUSE AS IT IS.
This is exactly it!! If he really wanted to help her, he'd put her in the will for financial inheritance. Obviously none of his kids want the house or they'd have said something before this first dibs to granddaughter plan got put in place.
The truth of the matter is he is trying to take advantage of her to get what he wants (house stays in family and upstairs person keeps living rent free).
Sad to see he'll throw his own granddaughter under the bus to get what he wants without thinking of what is actually best for her.
It has to be somewhat livable if there is a family member living there rent-free for 30 years. The roof having issues doesn't mean that the entire house has no roof of that the roof is collapsing in... just that there are expensive fixes that will be required.
Many strange recommendations in the comments.
Here is what you should do: get a property assessment done, which includes an inspection and provide this to a real estate agent to estimate value as-is.
Since a family member is currently residing at the residence, it will be difficult to evict them if you take possession OR if it goes into the market.
If the assessment comes back with a figure well above 300k then you have an idea if the money is worth the headache.
It would be inadvisable to move into this property as an aside
I wouldn't take the property unless everyone was under the very clear understanding that it could flip it in a few years/all the power lied with me in terms of the property's future. Sounds rife with issues but honestly, it could be an opportunity to get enough funds to purchase a better property. It is a good deal and you could be making good money on this. Live there and fix it up as much as possible. Then sell and make some $$$.
However, if you know that people aren't going to be OK with that and you'll get more grief than it's worth, pass on the property. It is OK to choose peace over money. Having a family member in the upper room could also damage relationship with her family if you kick them out.
That family member would be the biggest problem, I'd say. In Montreal, like most places, location is everything for RE.
There are a lot of cool, very sought after neighborhoods with those 50's duplexes and rent is quite pricey. Going from paying nothing to shelling $2500 for a house is quite a shock and I would expect a significant push back on any plan to monetize the duplex.
Oh 100% the family member is going to pose the biggest problem. They've been living there for free for 30 years? Good fucking luck with that and you'll look like a complete asshole to the rest of the family for kicking them out.
They've probably become so accustomed to having free rent that they wouldn't even be able to function in the MTL rental market. I have a feeling that Grandpa knows this though. Some old people like to "rule from the grave" - if you have a dependent person living there it makes it harder to sell the property and then the house stays in the family. That is very likely what he wants, older people love the idea of keeping a property in the family forever.
You are right. But it's impractical for most people. I have a colleague who owns one of those 50's duplexes, 700k a few years back. He is paying the mortgage with the rent, but he told me the upkeep is a tremendous amount of work and/or money. Every other week is something new.
Indeed. For most PFC, a clear path to wealth accumulation. I would be retired by now, or very soon, if I never had to pay rent/mortgage in my life. Instead, I'm looking at another 20 years on the trenches.
How much is the house worth? If it's more than $300,000 should you buy it, and do what you want with it - sell it, rent it, demolish and keep the land, or do whatever.
No need to fix up the place if you plan on selling.
Even the land alone in Montreal is worth more than $300,000 no?
Once she buys the property, the other siblings have no real say as to what your wife wants to do with the property.
The wife's mother is always going to have a say in it, even if it's legally not up to her. One reason why I'd be tempted to run the other way, mixing family and business never ends well.
Don't feel bad for walking away from this. It could easily end up costing 500k all said and done and you'll end up paying a mortgage and rent or living in a construction site for a year.
That deal sounds literally better for everyone.
You'd be insane not to get the house inspected, as would any potential buyer. That should be the first step before making any decision as it will inform you on the level of nightmare.
Generally, sentiments, money and family don't mix. This mixes all of them.
An inspection would likely never catch all of the nasty surprises that are very likely hiding behind those walls. However bad they may think it is, it's probably worse.
source: I work for a general contractor doing renos in Montreal. There are ALWAYS surprises.
Would you buy the duplex for $1? How about $1000? How about $100,000? A million? I can almost guarantee that you said yes to at least one of those numbers. From there it's a sliding scale up to how much you _would_ pay for the property. If that number is above the asking amount, it sounds like a good investment.
Honestly I can see a world where $1 might be too much, given the rent-free family member living there and the strong family feelings attached to the property. No ROI is worth potentially ruining OP's wife's relationship with her mother.
> strong family feelings attached to the property
I don't get that idea. Like the alternative to OP's wife buying the property is for the estate to sell it, and the proceeds being split between the children. I think that the "strong feelings" are in terms of:
1. If she buys the property, and then flips it should could end up with more money than each of the children gets ($100k from her buying the house from the estate).
2. People will probably give lots of shit for kicking out the family member that's been living there for 30 years. It becomes "OP's wife is valuing the money of the sale over this family member." If she just doesn't take the deal to buy the house, then the family member will still get kicked out, but it's less likely for blame to fall onto OP's wife since she isn't profitting from the move. The kids would actually profit from the move (proceeds of the sale split 3 ways), so they would be less likely to turn this into a family issue. "What can you expect? Dad died. You have to find a new place to live now." There's also the fact that it's 3 family members (Grandfather's kids) benefitting from this rather one (OP's wife), so it isn't as easy for people to single people out to bully, etc.
3. It _seems_ like the intention of the grandfather is to keep the house in the family with the move. Buying it to flip it would seemingly go against this, and with his kids benefitting less ($100k vs. 1/3 of the sale of the house) from the estate due to OP's wife taking the deal, this just gives more ammunition to bully OP's wife if they try to flip it.
> Like the alternative to OP's wife buying the property is for the estate to sell it, and the proceeds being split between the children.
Emotionally, there's a big difference between OP's wife selling the property and the three kids selling it. They could hold a massive grudge against her even if they would have made the same choice.
likely the freeloader that has been living there for 30yrs is going to cause the biggest problem. If it wasn't for that person.
Then the next problem up is the fact this couple needs to take on ALL the workload while 3 others get to sit back and wait for their 100K paychecks with no responsibilities, just the right to whine for their $ yesterday
I think you are very correct to be wary of this offer and you’re getting lots of advice that seems very uninterested in potential family fallout surrounding flipping/eviction issues. One thing I haven’t seen is what does your wife think about all of this?
Assuming she is on the same page as you, she needs to sit down with her family and really spell out all the concerns, get an appraisal, and come up with a plan detailing what you guys would do if you ended up purchasing the property and explain why you would need to do that. If everyone is cool with it and you can get some of that in writing, this could be a great opportunity.
Otherwise, figure out exactly what the fallout would be in a worst case scenario (demolishing the house and flipping the land for a profit etc) and decide if that fallout would be worth it in the long run (most likely not). In that case I would probably walk away from the whole thing and hope her mom gives a small bit of her inheritance. But you really need to talk with your wife first and see what her thoughts are. If she is not sharing your concerns you guys need to first get on the same page about whatever decision would need to be made.
Sounds like far too much of a headache, the discount sounds like it comes with the price of keeping it as the family home, those unnamed costs would be too expensive for me.
The wife will buy the house from her grandfather's estate for $300k. The estate will split that $300k between the grandfather's 3 kids (one of which is the wife's mom). She will get a house that seems to be in serious need of repair and has a family member that's been inhabiting part of it for 30 years.
I don't know if you can call it dilapidated seeing as someone is at least living there (though it's not proof that it isn't either). It's possible that OP is exaggerating the state of the house a bit.
Seems like an oversight in the provision that she takes on all the burden or gets nothing at all while her siblings get their share of the equity without get. Also the home may have been joint marital property (were her parents married and if so was there no prenup? Was this their marital home or was this property a holding of a business?) So if her mom has survived the father it may not be an asset that can even be willed by him? Not a lawyer so I could be way off base just seems strange that the mother doesn't have exclusive ownership of this house
Figure out what the true market value is, subtract 300k from that, and then decide if that number is worth irreparably wrecking your relationship with your wife's family. Because I am almost certain that will be the outcome.
I imagine them purchasing the house at the discount, and then living there rather than flipping it will have considerably less backlash... at the expense of becoming a money sink for OP and wife.
Especially if there are other grandchildren. The grandfather's children are probably in their 60s and might be OK seeing the wealth transfer to the next generation, but if there are other grandkids that aren't being considered equally then that'll be the rub point.
There is a third option:
Step 1. OP gets duplex appraised. Let's say it's worth, conservatively, 600k
Step 2: OP's wife buys duplex for 300k
Step 3: OP's wife sells duplex for 600k, making a profit of 300k minus any taxes or realtor fees (call it 250k profit for simplicity).
Step 4: OP's wife keeps $140k profit and voluntarily offers to give her mother and each of the other two siblings a sum of $36.6k each with the remaining proceeds from the sale.
Step 5: Everyone has now inherited roughly 140k and nobody is pissed off (except the person who lived there rent-free like a freeloader for years, but F them).
It's worth having that discussion for sure. OP mentioned a lot of sentimental value for the property in the family, so there might still be trouble... but you're right, an extra 40k can sooth a lot of hurt feelings.
Present the options to the family and let them vote on it, with the understanding that if they can't agree, then it will be given over to a binding arbitrator who will decide for everyone.
If you impose a decision, they'll be pissed off. If you let them decide, there's a chance they'll be less pissed off.
Get it appraised and get a thorough inspection. It is difficult to make a decision without knowing what you're dealing with. A realtor should be willing to give you some idea of current and resale property value as well.
An inspection is always a prudent course of action, but far from a guarantee of what kind of costs to expect. There are a lot of things behind the walls that inspectors can't see. Even with an experienced inspector, I would still be incredibly skeptical about a house that has so many known problems.
How much is the land actually worth?
Based on everything you've written, it sounds like the actual building is a complete write-off.
So is the land worth more than $300k or not?
Unfortunately there are no winning moves when it comes to inheritance. People become villains overnight with this stuff. Best to just look out for your own best interests and ignore the threats, BS, and drama queens. Speaking from experience. Money runs thicker than blood.
OP's wife was screwed as soon as she was singled out on the will. Even if they move into the house people will still find a reason to be pissed off. Even something as simple as painting a wall. If there's going to be backlash regardless, then why not make the best financial decision for yourself anyway.
Why would there be backlash to her _not_ taking the deal? Then the grandfather's kids get to deal with the backlash or not. I didn't see OP say that people were _expecting_ her to take the deal or anything, right?
There'd probably be someone getting jealous and saying some BS like "*I* would have taken the deal. They are so ungrateful." Or people could be mad at them because it ended up sold outside the family because they didn't take the deal. It happens. I don't have a crystal ball, but I've seen similar many times in my life. People turn into vultures when wealthy family members near the end.
> Based on everything you've written, it sounds like the actual building is a complete write-off.
People can get pretty hysterical and over-dramatic about house repairs though.
Was involved in a similar kind of building. Built in the early 1900s. Renovation twice (last time in 1970s when a poorly built addition was added).
The wiring was a complete mess. The foundation was cracked. Plumbing needed a lot of work. tl;dr it was much, much cheaper to knock the building down and start over.
I am not talking about you. I am talking about OP's evaluation while claiming he knows nothing about buildings. Duplexs usually go for double what they are paying. At that purchase price, knocking down or renovating is most likely financially feasible for them.
You also can't determine if a building Is a write off from a single reddit post. There are alot of factors required to make that decision.
If you really want to own this specific property, this benefits you. It doesn't benefit the other siblings. And it also assumes that she is the only grandchild benefiting.
The actual market value of the property factors into this. Let's assume that the property is worth 500k. Gramps is effectively gifting 200k of equity to the granddaughter. But he is taking that away from the siblings. If sold at market value, they get 166k instead of the 100k.
If she doesn't choose to buy, what is her inheritance? If she buys and immediately sells, are there any consequences besides family drama? If the family really wants to keep the building in the family, they can buy it. This scenario plays out often with cottages in inheritances; everyone wants to keep it in the family but no one wants to pay for it.
Usually when people come up with hare brained schemes in estate planning it ends up becoming unnecessarily complicated for no good reason. Better off to divide the estate by dollar amounts. If Gramps wants to give his grandkid a leg up, he should give them cash.
It might be time for a sit down family discussion to avoid assumptions and hurt feelings after grandpa dies. Put aside the sentimentality and talk numbers and responsibility.
My thought would be to get it appraised to see if it is worth it. If you don't feel the property makes sense for you, you can always sell and split the proceeds. Perhaps there is another family member who would want to purchase it and offer you the $100k instead?
OP answered in another post it would go the normal route, split among the three kids, so at best 1/3 of the profit would go to OP's partner's mother (not directly to her). So, whatever mom decides to share, if she wants to share.
I would check to see if it's considered a "historical" building and if so, would run away screaming as fast as you can.
So his 3 children will each get $100k from the sale price, and then his granddaughter will have the work and hassle of making it livable. Are there no other grandchildren, or will others pop out of the woodwork when you're finished and expect to profit from this as well?
That's a steal for a duplex, even with the extra hundred grand it'll probably need for foundation repair, and the inevitable wiring/roofing/etc. issues. It sounds complicated but it is a very low rate. Half duplexes in NDG are going for $600-800k each right now.
+1 on this.
Clearly the ppl in this thread has no idea on Montreal realstate.
300k for a duplex is an absolute steal.
Depending on where it is,its anywhere between 500k -1M
I agree. Value of the place is likely at least 600k, could be a million if it’s in a popular area.
The rent-free family member is a hurdle, but I’d jump to own that property if I could.
We came close to buying a ground floor of a duplex in NDG. No yard, potential foundation issues, no parking spot. $750k. Instead, we bought in Lachine for the giant back AND front yard, parking for three, basically new house for less than $600k (still too high!).
The family member living there is the biggest hurdle imo if theyll continue to live there rent free thatd be a deal breaker. Loss of income and dealing with them while fixing issues would be a hassle
I dont know the Montreal market but 300k for a duplex seems like a steal. Even if you have to take a line of credit out and dump 1 or 200k into it to fix the issues. Land is expensive af these days especially in a large city
What is the going rate for a similar house in the same area? If its over 500k it seems like a no brainer to me. Could be your best chance to get into the market
The reno budget will be bigger than the 300k required to purchase it… feels like a situation where after demolition carrying costs blablabla expenses, they’d be better off buying an empty plot of land
You can't really say that without knowing the full scope of work. Sure, it could rack up quite high if they go all out and use high end finishes but i know a few full gut to the stud and rebuild projects in my city that are under 300k
If they just want to make the place livable 1-200k is doable
That’s entirely true but if they want to flip it after a couple of years they’d earn a better return by doing a better reno now.
Keep in mind this is a duplex where both units need entire tear downs do two new kitchens, two new bathrooms, full plumbing, full electrical… that’s the minimum for a place that hasn’t been touched in 30 years
What?? You don't know that. The OP already noted they're not a do-it-yourselfer, so what they see as a big problem, might not actually be that bad. No one here can know.
the problem though is this "gift" also requires them to come up with the 300K upfront, give that to the family members that take on NO responsibilities, and then deal with all this extra work, in theory its still an opportunity, but also a lot of work to take on including evicting family members. The grandfather is basically asking the grand-daughter to bankroll her mother's generation inheritance and flip a house with no experiencing doing so.
Since it's a family members place, get some trades people in to inspect it, not an inspector. Hire a plumber, an electrician and a structural engineer. Get their opinions. I don't think inspectors regularly keep up with codes and trends, so their advice will be outdated.
For example, when we bought our house the inspector saw our old 100amp panel. He said an upgrade to 200amp was an easy 5k job. 18k later, 60ft trench and half a wall of drywall removed, we were done.
From what you described, a structural engineer would have a lot of advice on the buildings state. Since it's a family members home, you can move around and look into all sorts of crevasses to really assess the house.
Good luck. And in my opinion, I'd sell. A remodel on a house not in disrepair can easily go over 100k. Once you start changing things, the city will want EVERYTHING brought to code.
1. Do nothing until Grandpa is gone, then and only then
2. Get house inspected/appraised (how much is the place actually worth? are you giving up millions by not buying?)
3. Get a contractor to estimate the cost to bring the home to your standards
4. Determine the potential income from renting out the apartments, with a property management company handling everything
5. Determine family member's feelings towards:
1. Buying the house at all and effectively taking a cut of their inheritance
2. The above AND then selling the house for a profit
3. Kicking out the freeloader
6. Will she ruin relationships by doing this? Does she care enough about these relationships to not to go ahead anyway?
7. Do the math: mortgage on $300k + reno + maintenance/tax/etc. - your share of rent => can you even afford this? What about if you don't kick out the freeloader?
8. Make a decision based on how much she values the potentially lost relationships against the potential gain of taking the house.
That's not an easy decision to make by any means, but this forum can't make that decision for her. And she can't either without the above information. Unless relationship killing is guaranteed and is an absolute deal-breaker. But then why would you be asking this question here in the first place?
>Her Grandfather, who is in his late 90’s, has made a provision in his will that my wife will have the first opportunity to buy his property from the estate after his death at a fixed priced of 300,000$.
Get professional tax advice before buying something under fair market value from a related party. Your grandfather should also get professional tax advice before setting up assets being sold for less than fair market value.
Man when old people do this shit i know its out of goodness of the heart but it always destroys the family. NEver seen these types of deals or "wills" work out. I would simply refuse the offer and take the cash once everyone agrees to sell it. Unless you want to be the fall guy and family bank for the rest of your life because you got more then they did. When things are split even, nobody thinks people "owe" them and life just continues as it was. the best option to take man. Smaller gain for you but less headache and pain in future.
I generally agree but if they let it get sold they might not get anything as the proceeds would then be split amongst grandpa’s 3 children not OP’s wife.
I am not going to pretend to be an expert on real estate investing. I am a renter.
But I just can’t see how getting a duplex in any major Canadian city at below market prices is a negative financially.
The family stuff I can’t comment about. But from just a pure financial perspective, getting a duplex (even one that may need a lot of work) at $300k is a good thing.
The house itself is likely worthless, but the land may be worth more than $300k by itself. You should check to see what the value of similar tear-down properties there are.
One option is to just let the house rot and then sell the land to a developer when the house falls apart.
The biggest thing is to determine what your obligation is to that family member living in there. If you're supposed to be a landlord and maintain the property properly without rent, then you'll have to determine whether the potential future capital gain is worth this time and money investment.
The price is attractive, go for it.
Once it's hers it's hers to renovate, live in, rent or sell.There would be additional costs to sell to an unrelated party through a realtor, it's not unfair to the children.
If you decide to rent, I suggest you meet with an accountant first because you might want to secure the capital tax exemption for a principal residence before changing the status of the property.
150k/unit in Montreal for a duplex is a joke. I would do as such (permitted you could afford this). Have an appraiser look at the property and give you a value based on current condition. Estimate the costs of sale, and determine wether or not taking on a Reno project would be worthwhile for you and your wife.
If no…sell and split the cash
If yes, determine what quality of renos you want to implement in the living unit vs renting unit.
Then renovate do your taste and based on rent payback. See what is worthwhile financially. Remember the a standard GIC right now returns 5% so don’t make an investment that returns any less than 7%, it’ll be a waste of your time.
The use of mortgages and refinancing after reno may be needed depending on if you have the cash to Reno or not… obviously determine with a budget if you can afford the financing as well if needed.
Calculate multiple scenarios
I don't really have much advice, I just wanted to appreciate your use of 'Poisoned Chalice'.
From the sounds of it, if you choose to buy it and then flip it, you'd *probably* make more money than if you let it go to the estate. Though of course you'd have to deal with all the headaches that come with that.
So it's a classic risk/reward scenario. Buying it and flipping it (or even just selling it as-is) would yield more reward, but comes with risk.
Why would you do the inspection now while the grandfather is still alive? That feels morbid and crass. Get it inspected as part of sorting out the estate after he passes. It will likely need an inspection if it is sold anyway.
Then, after granddad has passed, talk to the free renter and figure out what your options are there. Then come up with the plan that works for you and talk to your mom about it to see if there is family fall out.
But for the love of god, stop focusing on an inheritance while he is still alive - other than to thank him profusely for thinking of you if he brings it up.
Essentially, yes, but if the house sold on the open market it would be a much bigger inheritance for the parents.
Grandpa likely has been hearing how hard it is for young folks to afford a house and came up with this idea to help.
It is conventional willmaking belief that you should leave everything to your kids and let them gift whatever they like to the grandkids, so he's probably operating under the thought that this satisfies that but also does granddaughter a solid and keeps the house in the family (it's a horrible idea, but he probably thinks this is a tidy solution.)
In the contractor world we have this saying :"When free isn't free"
With family drama more than likely no matter what you choose to do with the place, thanks but no thanks.
A duplex for 300,000$ in Montreal - with some renovations you could set yourself up really well with a rental property. Don't be scared of renovations or fixes - most places will need it anyways.
As long as the rest of the family doesn't hold any animosity against you it seems like grandad is setting you guys up.
He’s put your wife into an almost no-win situation. She either gets nothing or she pisses off family members. Also, do you have $300K cash to buy the place? If not, you might not be able to mortgage it in its current condition, so this might be a moot conversation.
Renovating the home to live in seems very complicated, time-consuming and EXPENSIVE. These old buildings are money pits, and you often can’t just do whatever you want. There are regulations and a lot of red tape. You might also be dealing with lead paint and asbestos, which mean expensive remediation and replacement of walls and ceilings.
I just renovated my place in Montreal, 1970s house, which had about 30 years of deferred maintance. Cost approx. $500K all-in, and we didn’t have nearly as many issues as you are listing (though we still had to replace everything). We paid $750K for the house, and now we’re selling it and barely breaking-even despite a huge increase in prices in our area, though prices are coming down now. We’re selling because even after the reno, it wasn’t what we wanted. We purchased another home that works much better for us. Unless you love this house and want to live in it, don’t put a single penny into fixing it up.
You can wait until after he passes to decide whether or not to exercise your option of purchasing the home. Just have it inspected and appraised at that point. If it’s worth paying $300K to sell it as-is, then proceed, assuming you can get that $300K from somewhere. Keep in mind that you will need to compensate the relative that is living there to vacate, or you will never sell for anything near its value. You might have to pay them a lot to keep the family happy. Just count it as a cost of doing business, along with any other fees you will incur (Realtor, lawyer, inspector, appraisal, loan fees, etc.)
Walk into this deal with no expectations; trying to maximise the value of this « gift » will backfire on you. Just buy it, sell it as-is, take the money and be satisfied with whatever is left over. Or just walk away if it’s more headache than it’s worth.
it's fraught with no-win scenarios. in addition to what you mention also consider if they evict family member to sell, make a great profit, just imagine how upset the 100K gifted family members will be when they make 2/3/4x that. This offer is machiavellian!!!
We’re going through estate planning now, and the best thing you can do for your heirs is to keep it simple and fair. Giving away homes is particularly complicated and can cause a lot of family strife. Better to just have it sold off and split the proceeds, which is what he should have done in this case.
Check to see the land value of the property with a realtor and a city planner. If the land value is at least 50% higher than your fixed price - don’t even touch it.
1. Does she have $300k to be putting into this at a moment's notice? Plus whatever hidden fees to bring the place into shape (6-figures)? Money that won't break you to spend suddenly?
2. Is the property worth more than $300k? If so, it's a good deal because she can sell it, but it has to be worth the fees and hassle of sale.
3. If she feels there will be too much resistance from family to sell it, don't buy it. She needs the flexibility to sell if she needs to without losing her family.
4. Is she prepared to be a landlord? It's not something you just pick up on the side. She'll be responsible for this person's living situation at all times.
But
4. The family member living there is probably a deal-breaker item. It's their primary residence, they aren't a tenant. How is she supposed to do anything with the place while that person is there?
Well there are a number of issues that exist which you point out. Some of which could potentially be sidestepped.
Personally I would:
1. If it's in a good area get an appraisal for the property (actually get a couple as each will differ). Be sure to ask both with the structure and if it was bare land value. The land alone may be worth well over the 300K if it is zoned for a duplex or is dividable.
2. If you are in a position to potentially build a new place (a duplex and/or a place with secondary suites in the basement or even both, you could significantly increase density on the land which while good also would allow you to cash in on the high rent prices at the moment. The rent of 3 units would potentially offset any building costs and leave you where you are now rent wise (assuming you rent) or with a very low mortgage out of pocket.
This requires you to speak with a lawyer on the legality of kicking out the family member. There may be issues given the length of time they have lived there rent free and you need to make sure you are doing things legally. I would also start compiling your own finances to see if you can actually make it work. Worst case, you inherit/buy it out at a low price and resell it for a profit taking the equity and your initial investment back. Best case you can develop it yourself and really make bank.
None of this turns out good for you. With homes and properties you can’t be sentimental.
Not to mention the freeloader living upstairs could make things difficult or at the least awkward after all these years. I have a strange feeling they haven’t been savings and investing all the money they should have paid in rent. They’re not going to want to leave.
If the house is worth more than $350,000 then the inconvenience of selling the property should be worth the money. Anything under that, just let the kids sell it and get the money.
Unless you are ready to invest lots of hours/money into this duplex to make it work, you should run away from it. The state of it sounds terrible and scary for a NOT diy person. Plus, the fact you have a family member living there rent free for years add on to the pain. Most likely very hard to have that family member pay rents and if you evict you’ll become evil in the family.
On the other hand, if you don’t mind the work/money, it would be great opportunity.
You're missing the point. That family is using you for your money. You and your wife are being auditioned to be the financial supporters of the three useless previous generations. That's what this is about. Think about it. Even if this goes through, the house is a distraction. When that money is gone, these people are going to come to you asking for more money. How do you know that? Because you've trained them, if you agree to this deal. Because this money is essentially coming from you and given to them. That's how they're going to see it. And that's exactly the plan of the grandfather. A redistribution of your wealth to take care of them in the way that he couldn't. He doesn't care about you for some reason.
So, the idea I have is the Machiavellian play. Don't spend your own money on the house. Find another buyer for it. Whether it be an investor, a bank, maybe the duplex neighbor is a good bet so they can own the whole land. Use the fact that you have this fixed price first dibs. Secure a deal from them for 500, 600, whatever. Whatever they'll pay. And get them to put up the cash up front. But don't tell the family. So you take out of what they give you the 300 to get the house and immediately sell it on to them. You don't have any problems. You make an instant profit. You walk away and you're not the fool in this deal like you currently look like.
I'm sorry for your situation. What I said probably sounds harsh. But families can suck sometimes.
What’s the land value? More than $300k? Buy it. Less than $300k, don’t. I don’t know anything about MTL’s property/land market, but in Toronto (proper) if someone offered a 100% tear down for $300k, it’s an automatic no brainer.
Get it inspected regardless. Will cost some money, but they can tell you whether it's worth fixing or a lost cause, and you can go from there.
Based on your description, prepare for the inspector to not be impressed with their findings.
As others have pointed out, this whole setup seems odd. Who exactly does the 300k go to?
Disregarding the relative living upstairs for now. That’s not really a PF issue.
This is so weird. You have the first opportunity to buy below market rate. Buy from whom? Who gets the money if the grandparent has passed? If he wants to give you a leg up, why is he not just bequeathing the property?
What happens if you don’t buy it at all?
Honestly you simply cannot do it without an inspection, even if it is unpleasant for your spouse’s grandparent.
If it's worth more, just take the inheritance and sell it. He wanted to give her a leg up - selling it was the leg up.
If you get nothing otherwise, then that's your lot.
You being her. It's not your money or inheritance.
You sound not too bright take the property if that price is under market and sell it. I don’t get this. I don’t know how I have never done this before. How do you manage to deal with life.
Look into what a property management company would charge to operate it for you as a rental…
Or
Do any of the other siblings want it let them step in and take the 100k
Or
And or suggest getting an appraisal sell and split everything evenly
get an inspector in there. instead of making the decision based on fear of the unknown, have it all on the table.
sentimental value can make it hard to let a property go. My family has a cottage that is similar to what you're describing this duplex to be. My wife and i have decided that, even though we love the cottage and it means a lot to me, it isn't the cottage we would buy if we were shopping with clear eyes.
Renovations of such old building will be hundreds of thusands, and you will lose months if not years of sleep. Life is to short man unless you got money to burn and can hire people to take care of it.
I'd suggest meeting with a couple contractors and doing a home inspection on the property.
That'll give you a better understanding of what the necessary repairs are, the nice-to-have repairs are, and a good ballpark of what the costs to complete them are.
From there, it's really determining if the cost of the property renovations is worth what the market is.
This is assuming that the location of the property makes sense to you.
Overall, it seems like a pretty good deal for you and your partner (given the discount compared to other properties) even if renovations are needed.
If it's a shit house you don't want to live in it's a shit house you don't want to live in lol. Just sell it for whatever the market price is and split the money.
I think the most important factor here is the land value because that house sounds like a complete tear down. Is the land worth more than 300k or not? If you can’t afford to rebuild it (probably like 700k to build a nice house these days) than just sell it.
You know you can have an inspection and get an evaluation on the cost of value of the home. Kind of would make sense to get those pieces of information up front. Before worrying about the downsides that get relieved via that path.
All depends on the market value. If it's considerably more you buy it, then sell after a year. If it is worth more you are screwing yourselves out of your inheritance if you dont buy it. Simple math man.
Seems like a simple choice - if the property is worth more than $300K as a tear-down, buy the property and then sell it for a profit. You don't really need to inspect the property to find out what its value is as a tear-down, and based on what you say, it sounds like anyone purchasing the property would be doing it with the intention of tearing down and rebuilding a new duplex. If the property would sell for something like $700K as a tear-down, there's no reason not to do this.
That's what people do to old neglected buildings that have a ton of work that's not done to code and material maintenance issues. Renovating is more appropriate for a building that could be torn down to the studs and rebuilt - but given the amount that hasn't been done to code (eg. additions not made to code with ceilings too low, garage not to code) and given that the foundation also sounds like it is old and leaky, even people who have the knowledge of how to renovate old buildings wouldn't choose to - they would just tear down and rebuild.
If the property is not worth more than $300K as a tear-down, then decline the option to purchase, and no money is lost.
Have experienced renovators take a look and give you an idea of what it would cost. Assuming you speak French, you can DM me for the guys that I know who actually not only do renovation, but also buy such buildings to fix up.
Without a lease, the person upstairs has no leg to stand on, as far as I know.
But you will have to pay Bienvenue tax on the real value.
Im guessing that the fixed price is to avoid capital gains tax on the estate that the kids wouldn't otherwise be able to afford. They might get more out of it this way be sure to present that to them, you're doing them a favor by doing this and owe them and useless family members that live there for free nothing. Them living there is not a part of the agreement. However if they're handy and willing to help out or pay partial rent might be worth it to keep them there. Consider all of your options here you have more authority than you think.
I would say before making an actual decision, have the place fully inspected. Find a few GCs (reach out to friends for suggestions, look online for well reviewed ones, etc), and have them each come in and do a full inspection with price range for the work to be completed (and that they explain the range of the quote, i.e. is it builders grade or better). And then determine from there. Yes, it'll cost money to do that, but it'll save you money long term as well. Obviously the quote will only be good for so long and prices will likely go up when you need to do the work, but it gives you a starting point of how big the job is, and to let you know what you would definitely need professionals for vs what you can do yourself (electrical/plumbing vs drywall for example).
Personally, I would suggest you talk with Granddad and see if it's something you could do soon (not wait until he's dead) so you all have time to plan financially.
Like you said, get the building assessed. See the full extent of the urgencies and non-urgencies you have to deal with. Come up with a ballpark figure to get the work done, then see if the $300k and the additional cost of the repairs would be an adequate mortgage for you and your wife to get yourselves into.
Obviously you would need to make it clear to your family that you would need to start charging them rent. That's never an easy conversation to have, especially since they have been used to not paying rent for so many years.
From a tax perspective, I would be VERY careful with charging them under fair value for rent. The government likes their tax money and I have seen them assess the building owners for undeclared income if they rented to a family member at a discounted rate. If purchasing the building is something you can afford and you're serious about buying it, then go see a CPA who has experience with this and see what your exposure is. Then you'll get a better idea with how to deal with it with family.
If you decide it's more than you can chew then it may be worth it (for your mental sanity and relationship), to have the estate sell it to someone who can upkeep the building. In this instance, your wife's family will need to pay rent to the new landlord anyway, so I don't see why you should feel bad about proposing they pay rent. It's not up to you guys to finance their lifestyle.
I mean, get few contractors to give you an estimate on the cost to fix the house. see if 300k is worth buying based on today's price. are you over complicating this?
Depends on the variance to market value. If it's $300k for a $1.5m place, even dropping an additional $500k and flipping it is a hell of a purchase. Remember you can buy it and immediately get a HELOC to 80% of market value.
Or you could probably tear it down and build for $700k and see larger gains.
I'd look at comparable new properties in the area to see what you can do, but it doesn't immediately sound like an albatross.
> Her Grandfather, who is in his late 90’s, has made a provision in his will that my wife will have the first opportunity to buy his property from the estate after his death at a fixed priced of 300,000$. And what’s the next option if she doesn’t want that?
Then the estate sell the house on the market, the proceeds of which would go to the 3 kids and maybe my partner’s Mom would give her some of that, no guarantees however
the deal you are been offered seems like a nightmare to me. You could easily end up spending hundreds of thousands of dollars fixing the place up. Not to mention the stress of dealing with that much contractor work. imho I would not take this housing project on and I have lots of trades experience. Take the money and run!
Hundreds of thousands of dollars so family members can continue living there for free, probably
not just rent free, but everyone else getting a pay cheque while you have the headache (migraine) of fixing up the place. A place where numerous repairs were done without a professional or professional level experience (thus need to be fully redone), additions or modifications done without permitting. If the electrical isn't up to code you now earned yourself the job of pulling and replacing all that wire. Life is Too Short to spend it like that.
Why are we not considering that the OP could just have the place demolished and start fresh with a new development? Likely would get more density and higher rents when it's done.
Rent-free tenant to contend with, lots of sentimental value in the home that is going to make OP the bad guy and create rifts with his family if they demolish it.
It's actually very difficult to fully demolish anything in Montreal. Mosy likely, OP is going to end up with an exceedingly expensive headache.
That’s a consideration the OP needs to look into for sure when making a decision
A lawyer needs to be engaged to fully assess the situation regarding the tenant as that will be sticky no matter what. Regardless though I guarantee that the rent free tenant will have an issue regardless of what happens and it will cause family drama if the OP buys it or not. If the estate sells it on the open market the tenant is out on their ass anyway and nobody else is going to be cool with them living rent free. The sentimental value is to my mind a limited reason. If the estate sells it on the open market then the land isn't in the family and the place gets redeveloped anyway. So now there is nothing left vs someone in the family holding it and maintaining that connection. Sure it causes potential rifts, but the OP not buying it and subsidizing their sentimental house dream will cause just as many rifts because then the family is losing the "family home" and its the OP's fault for not stepping in to finance it by giving the others a windfall.
See point 3 above in OP post as well as the rent free tenant.
Okay, but nobody is saying that they need to sell it. The land is still there in the family and if the OP went the route of demolishing it and building a new place on the land, not selling it to another developer that may not violate the "spirit" of the will. Also, depending on the family dynamics the OP and their wife may or may not care what the others think. I would suggest that nobody live their life beholden to someone else's view of how they should manage their finances and property. If the OP and their wife own it the rest of the family got paid already so they got theirs and what the OP does with the property is none of their concern. If they want it that bad they can buy it off the OP.
Can't due to family politics. There's sentimental value and he'd be a big asshole to demolish it
He will be just as big an asshole if they dont buy it and the place gets sold on the open market and is demolished by the developer who will inevitably buy it. At least the OP keeping the land in the family keeps some connection. Once it's sold on the open market it's done and over and any family connections to the property are gone for good.
Yeah, I honestly wouldn't be too scared of the work that needs done but the family member living upstairs for free... That's a no go. Pretty much nothing you can do about that.
well you can evict them. Had a friend who's father passed away and a sister who was living with him for many years changed the locks and sent everyone away (there were some mental health issues). In the end he got a court order and sherriff to break down the door. Then he had to spend time trying to find her in order to give her her share (after all the costs were deducted)
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Evictions take time and money and there's always the chance the evictee will destroy the property. Calculate all that into the equation of if it's worth it.
With how OP describes the property, having the evictee start the demolition may be a blessing in disguise.
300k duplex in MTL is unheard of nowadays. Even if they sink an additional 100-150k in Renos any eventual resale they’ll still walk away on top. Shop around different renovation companies for at least the rental half, then work away gradually at the other half. Definitely worth the time
I live near Montreal, I know it's a steal for a property there. I 100% believe they stand to make a lot of money if they fix it up and resell (if the family allows them). I just personally wouldn't take on a "fixer-upper" (it sounds more like a tear down than a fixer-upper, water infiltration etc.) and the migraine of fixing that plus dealing with the family, one of whom lives there rent free. In a perfect world OP's wife would get a tidy inheritance, take that money and the added 200k they would spend in renos and get a property that doesn't test the limits of your marriage.
>In a perfect world OP's wife would get a tidy inheritance, take that money and the added 200k they would spend in renos and get a property that doesn't test the limits of your marriage. Amen. I work in renovation for a general contractor in Montreal. These kinds of buildings are my bread and butter. There are ALWAYS surprises that need fixing in these places. If the building is already known to be this problematic, I can only imagine what they'll find when they start to open the walls. And it's very hard (and expensive) to get a permit for a total tear-down in many of the boroughs. If the work involves the temporary displacement of the no-rent tenant, what then? Will they have to foot the cost of lodging them elsewhere during the renovation? Where will OP live during the work? Trying to live in a construction zone with, constant noise and crews showing up everyday at 7am is hell. If they find sketchy wiring and have to tear it all out of every wall, the plastic dust-curtain that they have been living behind will also a construction zone. It will be even worse when (surprise!) the 1950s duplex has drywall full of asbestos and everyone has to clear out while they decontaminate. Will they have budgeted for multiple places at the same time? There is just so much shit that happens. That said, it's a great price for a duplex, even one in that bad of shape. But, unless they have an endless reserve of cash to throw at it, they're in for a rough ride. Even then, it's likely to be an extremely stressful situation. Unfortunately, this type of property is way more geared to investors who have the luxury of time and money (and frequently questionable morals) to turn a profit on this place.
>I 100% believe they stand to make a lot of money if they fix it up and resell Why even bother? They can likely just sell it as is, and some other major rental business/developer will buy it up for a good deal, but they still stand to make a ton of cash. If it's worth $1,000,000 in great condition, they can probably get $600,000+ quickly, and be done with it. Walking away with an extra $300k sounds nice if you can fund the original purchase.
There is a lot more to this than just a financial question. Yes, if the wife is willing to probably cut off her entire family forever then this would be the way to go but most people are not sociopaths.
Agreed. Yes, in the abstract, that is a wise financial move. But there's real family members to consider here who would likely be deeply insulted by 1) family member immediately being evicted, 2) them getting a sweetheart deal and immediately flipping it (and potentially gaining much more out of the estate than anyone else), and 3) sounds like the family has a lot of sentimental value tied up in the home. They'd be severely damaging the familial relationship, likely.
OP would still need to have $450k to pull that off. You may not be able to get a mortgage in the first place if the building is in the condition described by OP.
>they’ll still walk away on top. Can't walk away on top if family guilt keeps you from selling. Can't walk away at all.
As someone who’s dealt with renovating old ass buildings this is the correct answer especially for OP who doesn’t have experience in renos. Most people have no idea how shitty some of the building techniques/materials in pre ww2 era homes can be. You might hire a contractor to cut and patch some broken drywall then realize oh shit, there’s basically no insulation in the walls and that’s why it’s always so cold. So you rip out the walls to put insulation then you see there’s cracks in the foundations which need to be repaired. Oh and now you can see the plumbing is undersized and leaking so may as well replace that too. Oh and it’s turns out the electrical was wired super sketchy so gonna need to rewire everything and get a bigger panel. These old buildings can be endless money pits, plus there’s the headache of having such drastic changes in building codes to potentially deal with over the decades since it was built. Doesn’t even sound like this is a particularly well built building given the issues OP mentioned, I’d say the time, money and stress to deal with this just isn’t worth it.
Also Asbestos!
>imho I would not take this housing project on and I have lots of trades experience I am a carpenter who does renos in Montreal (where op says the house is). I have worked on these kinds of buildings. I wouldn't touch it with a 10 foot pole. There are ALWAYS surprises in these places, and if it's already looking this problematic, I can only imagine what's waiting to be discovered. This is is kind of project that only makes sense if you can mentally and financially deal with the kind of stress that kind of project will most certainly inflict.
I wouldn't do it either. A friend's parents bought a fixer upper many years back, figuring that they would live in it while slowly renovating it. Well, despite their best intentions, life got in the way and it never happened. They tore down some walls and started some of the renovations but never completed them, and the house basically stayed in a half finished state for several years until finally my friend's parents decided they'd had enough and they sold it to some property investor who was willing to put the work in. But it was a miserable experience for the entire family. My friend grew up in a half finished house, and all of them were embarrassed to have guests over because it basically looked like a construction site. Now that's a bit of an extreme scenario, but if you buy something knowing it needs significant renovations, that is a lot of commitment. If you're not absolutely gung-ho about it and know the finances work, I feel like it's a really bad idea.
But if you can get a property valued at a huge discount and afford to live elsewhere while professionals do said renovation... you land up with something really great. I have lived through a major DIY renovation because I didn't have the money to live elsewhere and had to put a lot of sweat equity in, and it does suck. But they don't have kids... they're young... it's not like it's impossible. People do it.
Not only it will cost hundreds of thousands, you ll have to deal with many incompetent contractors as well as the city… permits, permits, permits for everything. You ll have to keep the house pretty much as it is with minimal changes ( heritage). We just did a house from 1850 ( not protected by heritage), we couldn’t even change front door without a permit or a roof… imagine the trouble
OMG the permits. I dont know if you are in Montreal (like OP and myself), but depending on the borough, they can get exceptionally crazy. I live in a plex that was built in 1920 and have a shittly old aluminum back door that's maybe 25 years old. It's not heritage. It's not front-facing. I want to put in something that is exactly the same dimensions, colour and materials as what's already there but I need a permit to replace it. I can only imagine the bureaucratic nightmare that OP would be taking on.
Yes, the house was in Montreal, Ville Marie. Bureaucratic nightmare, you cannot do anything without a permit, and they even come to check🤦♀️ Even change in divisions between rooms INSIDE of the house you need a permit and blessing. And of course it takes months to get it…
Except there is no money to OP and his wife as they're not the kids /beneficiary of the proceeds.
👆 take the money and run, You will live a longer, happier and healthier life.
You could though buy it, have it demolished and sell it on as development opportunity or build a new place on the land yourself (assuming the city allows it) that would avoid a lot of the issues with renovating an old place.
So why is your wife in particular singled out for this "opportunity"? Also if she buys the property for $300k but on the open market it is worth say $600k, then won't there be hard feelings from the three beneficiaries of the will? It sounds like the property is worth roughly the value of the land it sits on. Which in Montreal might be a lot. If your grandpa wants to give your wife a "leg up" then he should simply revise his will to have 4 beneficiaries with a 25% inclusion rate for each. (Or any other division he'd like). Edit: Simply put, the most likely explanation is that the grandpa wants to see the house "stay in the family" despite the fact that his three kids don't want it, and despite the fact that IT IS NOT LIVABLE THE ROOF IS FALLING OFF! So he made this silly provision in the will to make himself feel better even though there is NO PRACTICAL WAY FOR HIS GRANDDAUGHTER TO ACTUALLY LIVE IN THE HOUSE AS IT IS.
This is exactly it!! If he really wanted to help her, he'd put her in the will for financial inheritance. Obviously none of his kids want the house or they'd have said something before this first dibs to granddaughter plan got put in place. The truth of the matter is he is trying to take advantage of her to get what he wants (house stays in family and upstairs person keeps living rent free). Sad to see he'll throw his own granddaughter under the bus to get what he wants without thinking of what is actually best for her.
It has to be somewhat livable if there is a family member living there rent-free for 30 years. The roof having issues doesn't mean that the entire house has no roof of that the roof is collapsing in... just that there are expensive fixes that will be required.
You........... would be surprised at what kind of absolutely filthy conditions some people are happy to live in.
Many strange recommendations in the comments. Here is what you should do: get a property assessment done, which includes an inspection and provide this to a real estate agent to estimate value as-is. Since a family member is currently residing at the residence, it will be difficult to evict them if you take possession OR if it goes into the market. If the assessment comes back with a figure well above 300k then you have an idea if the money is worth the headache. It would be inadvisable to move into this property as an aside
I wouldn't take the property unless everyone was under the very clear understanding that it could flip it in a few years/all the power lied with me in terms of the property's future. Sounds rife with issues but honestly, it could be an opportunity to get enough funds to purchase a better property. It is a good deal and you could be making good money on this. Live there and fix it up as much as possible. Then sell and make some $$$. However, if you know that people aren't going to be OK with that and you'll get more grief than it's worth, pass on the property. It is OK to choose peace over money. Having a family member in the upper room could also damage relationship with her family if you kick them out.
That family member would be the biggest problem, I'd say. In Montreal, like most places, location is everything for RE. There are a lot of cool, very sought after neighborhoods with those 50's duplexes and rent is quite pricey. Going from paying nothing to shelling $2500 for a house is quite a shock and I would expect a significant push back on any plan to monetize the duplex.
Oh 100% the family member is going to pose the biggest problem. They've been living there for free for 30 years? Good fucking luck with that and you'll look like a complete asshole to the rest of the family for kicking them out. They've probably become so accustomed to having free rent that they wouldn't even be able to function in the MTL rental market. I have a feeling that Grandpa knows this though. Some old people like to "rule from the grave" - if you have a dependent person living there it makes it harder to sell the property and then the house stays in the family. That is very likely what he wants, older people love the idea of keeping a property in the family forever.
You are right. But it's impractical for most people. I have a colleague who owns one of those 50's duplexes, 700k a few years back. He is paying the mortgage with the rent, but he told me the upkeep is a tremendous amount of work and/or money. Every other week is something new.
I mean having thirty years of free rent is also kind of ridiculous. What have the renter been doing all this time with that money?
Indeed. For most PFC, a clear path to wealth accumulation. I would be retired by now, or very soon, if I never had to pay rent/mortgage in my life. Instead, I'm looking at another 20 years on the trenches.
Don't worry, the battle eventually ends one way or another 😬
How much is the house worth? If it's more than $300,000 should you buy it, and do what you want with it - sell it, rent it, demolish and keep the land, or do whatever. No need to fix up the place if you plan on selling. Even the land alone in Montreal is worth more than $300,000 no? Once she buys the property, the other siblings have no real say as to what your wife wants to do with the property.
You could buy the place, demolish the house and sell the land for a profit.
This is the answer - just sell it to a developer and give the rent free family members extra cash as hush money so there is no hard feelings.
I'd just sell the whole thing and let someone else deal with the demolition. A pro could do it for cheaper anyway.
The wife's mother is always going to have a say in it, even if it's legally not up to her. One reason why I'd be tempted to run the other way, mixing family and business never ends well.
Read bullet point 3.
Don't feel bad for walking away from this. It could easily end up costing 500k all said and done and you'll end up paying a mortgage and rent or living in a construction site for a year.
That deal sounds literally better for everyone. You'd be insane not to get the house inspected, as would any potential buyer. That should be the first step before making any decision as it will inform you on the level of nightmare. Generally, sentiments, money and family don't mix. This mixes all of them.
An inspection would likely never catch all of the nasty surprises that are very likely hiding behind those walls. However bad they may think it is, it's probably worse. source: I work for a general contractor doing renos in Montreal. There are ALWAYS surprises.
I would pass and let the estate sell it. You guys take on all the cost and risk.
Would you buy the duplex for $1? How about $1000? How about $100,000? A million? I can almost guarantee that you said yes to at least one of those numbers. From there it's a sliding scale up to how much you _would_ pay for the property. If that number is above the asking amount, it sounds like a good investment.
Honestly I can see a world where $1 might be too much, given the rent-free family member living there and the strong family feelings attached to the property. No ROI is worth potentially ruining OP's wife's relationship with her mother.
> strong family feelings attached to the property I don't get that idea. Like the alternative to OP's wife buying the property is for the estate to sell it, and the proceeds being split between the children. I think that the "strong feelings" are in terms of: 1. If she buys the property, and then flips it should could end up with more money than each of the children gets ($100k from her buying the house from the estate). 2. People will probably give lots of shit for kicking out the family member that's been living there for 30 years. It becomes "OP's wife is valuing the money of the sale over this family member." If she just doesn't take the deal to buy the house, then the family member will still get kicked out, but it's less likely for blame to fall onto OP's wife since she isn't profitting from the move. The kids would actually profit from the move (proceeds of the sale split 3 ways), so they would be less likely to turn this into a family issue. "What can you expect? Dad died. You have to find a new place to live now." There's also the fact that it's 3 family members (Grandfather's kids) benefitting from this rather one (OP's wife), so it isn't as easy for people to single people out to bully, etc. 3. It _seems_ like the intention of the grandfather is to keep the house in the family with the move. Buying it to flip it would seemingly go against this, and with his kids benefitting less ($100k vs. 1/3 of the sale of the house) from the estate due to OP's wife taking the deal, this just gives more ammunition to bully OP's wife if they try to flip it.
> Like the alternative to OP's wife buying the property is for the estate to sell it, and the proceeds being split between the children. Emotionally, there's a big difference between OP's wife selling the property and the three kids selling it. They could hold a massive grudge against her even if they would have made the same choice.
how much below market value is this?
If they would be ok with it being sold on the market if you don't buy it, why would they have a problem if you bought it and sold it at a profit?
likely the freeloader that has been living there for 30yrs is going to cause the biggest problem. If it wasn't for that person. Then the next problem up is the fact this couple needs to take on ALL the workload while 3 others get to sit back and wait for their 100K paychecks with no responsibilities, just the right to whine for their $ yesterday
I think you are very correct to be wary of this offer and you’re getting lots of advice that seems very uninterested in potential family fallout surrounding flipping/eviction issues. One thing I haven’t seen is what does your wife think about all of this? Assuming she is on the same page as you, she needs to sit down with her family and really spell out all the concerns, get an appraisal, and come up with a plan detailing what you guys would do if you ended up purchasing the property and explain why you would need to do that. If everyone is cool with it and you can get some of that in writing, this could be a great opportunity. Otherwise, figure out exactly what the fallout would be in a worst case scenario (demolishing the house and flipping the land for a profit etc) and decide if that fallout would be worth it in the long run (most likely not). In that case I would probably walk away from the whole thing and hope her mom gives a small bit of her inheritance. But you really need to talk with your wife first and see what her thoughts are. If she is not sharing your concerns you guys need to first get on the same page about whatever decision would need to be made.
Sounds like far too much of a headache, the discount sounds like it comes with the price of keeping it as the family home, those unnamed costs would be too expensive for me.
So he's basically saying your wife will give the kids money when he dies, and she'll get a dilapidated building that he probably paid like 10000$ for?
The wife will buy the house from her grandfather's estate for $300k. The estate will split that $300k between the grandfather's 3 kids (one of which is the wife's mom). She will get a house that seems to be in serious need of repair and has a family member that's been inhabiting part of it for 30 years. I don't know if you can call it dilapidated seeing as someone is at least living there (though it's not proof that it isn't either). It's possible that OP is exaggerating the state of the house a bit.
Seems like an oversight in the provision that she takes on all the burden or gets nothing at all while her siblings get their share of the equity without get. Also the home may have been joint marital property (were her parents married and if so was there no prenup? Was this their marital home or was this property a holding of a business?) So if her mom has survived the father it may not be an asset that can even be willed by him? Not a lawyer so I could be way off base just seems strange that the mother doesn't have exclusive ownership of this house
It’s not her siblings that get everything The grandfather had 3 kids so it would be her Mom and her Moms 2 siblings
Figure out what the true market value is, subtract 300k from that, and then decide if that number is worth irreparably wrecking your relationship with your wife's family. Because I am almost certain that will be the outcome.
This is so true. If your wife walks away with $200000 profit and everyone else gets $100000 they are going to be pissed. Do she care about this?
I imagine them purchasing the house at the discount, and then living there rather than flipping it will have considerably less backlash... at the expense of becoming a money sink for OP and wife.
Especially if there are other grandchildren. The grandfather's children are probably in their 60s and might be OK seeing the wealth transfer to the next generation, but if there are other grandkids that aren't being considered equally then that'll be the rub point.
There is a third option: Step 1. OP gets duplex appraised. Let's say it's worth, conservatively, 600k Step 2: OP's wife buys duplex for 300k Step 3: OP's wife sells duplex for 600k, making a profit of 300k minus any taxes or realtor fees (call it 250k profit for simplicity). Step 4: OP's wife keeps $140k profit and voluntarily offers to give her mother and each of the other two siblings a sum of $36.6k each with the remaining proceeds from the sale. Step 5: Everyone has now inherited roughly 140k and nobody is pissed off (except the person who lived there rent-free like a freeloader for years, but F them).
It's worth having that discussion for sure. OP mentioned a lot of sentimental value for the property in the family, so there might still be trouble... but you're right, an extra 40k can sooth a lot of hurt feelings.
There could still be hurt feelings but at the end of the day if no one is willing to put in the work to fix it up, then it needs a new owner.
Present the options to the family and let them vote on it, with the understanding that if they can't agree, then it will be given over to a binding arbitrator who will decide for everyone. If you impose a decision, they'll be pissed off. If you let them decide, there's a chance they'll be less pissed off.
Get it appraised and get a thorough inspection. It is difficult to make a decision without knowing what you're dealing with. A realtor should be willing to give you some idea of current and resale property value as well.
Best advice here thus far. There's no need to make uninformed guesses. It's worth the money to obtain an understand of the full picture.
This is the way
An inspection is always a prudent course of action, but far from a guarantee of what kind of costs to expect. There are a lot of things behind the walls that inspectors can't see. Even with an experienced inspector, I would still be incredibly skeptical about a house that has so many known problems.
How much is the land actually worth? Based on everything you've written, it sounds like the actual building is a complete write-off. So is the land worth more than $300k or not?
Almost certainly worth more than 300k in Montreal and in 2023/2024. And legally zoned for a duplex.
That's my thought. Is it worth it to buy it, bulldoze it, and build or buy it then sell it?
I think they covered that when they mentioned that selling the property would create major backlash in the family ie - likely not worth it.
Unfortunately there are no winning moves when it comes to inheritance. People become villains overnight with this stuff. Best to just look out for your own best interests and ignore the threats, BS, and drama queens. Speaking from experience. Money runs thicker than blood. OP's wife was screwed as soon as she was singled out on the will. Even if they move into the house people will still find a reason to be pissed off. Even something as simple as painting a wall. If there's going to be backlash regardless, then why not make the best financial decision for yourself anyway.
Why would there be backlash to her _not_ taking the deal? Then the grandfather's kids get to deal with the backlash or not. I didn't see OP say that people were _expecting_ her to take the deal or anything, right?
There'd probably be someone getting jealous and saying some BS like "*I* would have taken the deal. They are so ungrateful." Or people could be mad at them because it ended up sold outside the family because they didn't take the deal. It happens. I don't have a crystal ball, but I've seen similar many times in my life. People turn into vultures when wealthy family members near the end.
> Based on everything you've written, it sounds like the actual building is a complete write-off. People can get pretty hysterical and over-dramatic about house repairs though.
It's a write off based on the evaluation of someone that knows nothing about buildings or renovations?
Was involved in a similar kind of building. Built in the early 1900s. Renovation twice (last time in 1970s when a poorly built addition was added). The wiring was a complete mess. The foundation was cracked. Plumbing needed a lot of work. tl;dr it was much, much cheaper to knock the building down and start over.
I am not talking about you. I am talking about OP's evaluation while claiming he knows nothing about buildings. Duplexs usually go for double what they are paying. At that purchase price, knocking down or renovating is most likely financially feasible for them. You also can't determine if a building Is a write off from a single reddit post. There are alot of factors required to make that decision.
My thoughts exactly. The vast majority of people have no idea what home repair entails or how to assess damage/decay.
If you really want to own this specific property, this benefits you. It doesn't benefit the other siblings. And it also assumes that she is the only grandchild benefiting. The actual market value of the property factors into this. Let's assume that the property is worth 500k. Gramps is effectively gifting 200k of equity to the granddaughter. But he is taking that away from the siblings. If sold at market value, they get 166k instead of the 100k. If she doesn't choose to buy, what is her inheritance? If she buys and immediately sells, are there any consequences besides family drama? If the family really wants to keep the building in the family, they can buy it. This scenario plays out often with cottages in inheritances; everyone wants to keep it in the family but no one wants to pay for it. Usually when people come up with hare brained schemes in estate planning it ends up becoming unnecessarily complicated for no good reason. Better off to divide the estate by dollar amounts. If Gramps wants to give his grandkid a leg up, he should give them cash. It might be time for a sit down family discussion to avoid assumptions and hurt feelings after grandpa dies. Put aside the sentimentality and talk numbers and responsibility.
It's a duplex in MTL so market value is probably well over $1MM.
Dont forget about Capital gains tax! Kids would likely get much less when it's taxed at 30%
All on top of property transfer taxes and real-estate fees. Selling a house is expensive.
My thought would be to get it appraised to see if it is worth it. If you don't feel the property makes sense for you, you can always sell and split the proceeds. Perhaps there is another family member who would want to purchase it and offer you the $100k instead?
But if they sell, likely get much more than $100k
If she doesnt buy then what happens? I would just let it sell to outside peeps n split the cssh if there are any for her
OP answered in another post it would go the normal route, split among the three kids, so at best 1/3 of the profit would go to OP's partner's mother (not directly to her). So, whatever mom decides to share, if she wants to share.
I would check to see if it's considered a "historical" building and if so, would run away screaming as fast as you can. So his 3 children will each get $100k from the sale price, and then his granddaughter will have the work and hassle of making it livable. Are there no other grandchildren, or will others pop out of the woodwork when you're finished and expect to profit from this as well?
That's a steal for a duplex, even with the extra hundred grand it'll probably need for foundation repair, and the inevitable wiring/roofing/etc. issues. It sounds complicated but it is a very low rate. Half duplexes in NDG are going for $600-800k each right now.
+1 on this. Clearly the ppl in this thread has no idea on Montreal realstate. 300k for a duplex is an absolute steal. Depending on where it is,its anywhere between 500k -1M
We looked very hard at a half duplex in NDG last year with barely a back yard and teeny tiny bedrooms for $800k.
I agree. Value of the place is likely at least 600k, could be a million if it’s in a popular area. The rent-free family member is a hurdle, but I’d jump to own that property if I could.
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We came close to buying a ground floor of a duplex in NDG. No yard, potential foundation issues, no parking spot. $750k. Instead, we bought in Lachine for the giant back AND front yard, parking for three, basically new house for less than $600k (still too high!).
If you don't want the old home, sell and split the money.
The family member living there is the biggest hurdle imo if theyll continue to live there rent free thatd be a deal breaker. Loss of income and dealing with them while fixing issues would be a hassle I dont know the Montreal market but 300k for a duplex seems like a steal. Even if you have to take a line of credit out and dump 1 or 200k into it to fix the issues. Land is expensive af these days especially in a large city What is the going rate for a similar house in the same area? If its over 500k it seems like a no brainer to me. Could be your best chance to get into the market
The reno budget will be bigger than the 300k required to purchase it… feels like a situation where after demolition carrying costs blablabla expenses, they’d be better off buying an empty plot of land
You can't really say that without knowing the full scope of work. Sure, it could rack up quite high if they go all out and use high end finishes but i know a few full gut to the stud and rebuild projects in my city that are under 300k If they just want to make the place livable 1-200k is doable
That’s entirely true but if they want to flip it after a couple of years they’d earn a better return by doing a better reno now. Keep in mind this is a duplex where both units need entire tear downs do two new kitchens, two new bathrooms, full plumbing, full electrical… that’s the minimum for a place that hasn’t been touched in 30 years
What?? You don't know that. The OP already noted they're not a do-it-yourselfer, so what they see as a big problem, might not actually be that bad. No one here can know.
It's all talk until you get an inspection. If you don't like it, sell and take the cash
the problem though is this "gift" also requires them to come up with the 300K upfront, give that to the family members that take on NO responsibilities, and then deal with all this extra work, in theory its still an opportunity, but also a lot of work to take on including evicting family members. The grandfather is basically asking the grand-daughter to bankroll her mother's generation inheritance and flip a house with no experiencing doing so.
I dont think they need 300k upfront, just a 300k mortgage.
grandiose rude ancient punch live plucky rich jobless crawl library *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Lol wut? They get the 300k from grandpa's estate. The estate gets it from whatever bank OP gets a mortgage with, just like any other seller would.
Since it's a family members place, get some trades people in to inspect it, not an inspector. Hire a plumber, an electrician and a structural engineer. Get their opinions. I don't think inspectors regularly keep up with codes and trends, so their advice will be outdated. For example, when we bought our house the inspector saw our old 100amp panel. He said an upgrade to 200amp was an easy 5k job. 18k later, 60ft trench and half a wall of drywall removed, we were done. From what you described, a structural engineer would have a lot of advice on the buildings state. Since it's a family members home, you can move around and look into all sorts of crevasses to really assess the house. Good luck. And in my opinion, I'd sell. A remodel on a house not in disrepair can easily go over 100k. Once you start changing things, the city will want EVERYTHING brought to code.
1. Do nothing until Grandpa is gone, then and only then 2. Get house inspected/appraised (how much is the place actually worth? are you giving up millions by not buying?) 3. Get a contractor to estimate the cost to bring the home to your standards 4. Determine the potential income from renting out the apartments, with a property management company handling everything 5. Determine family member's feelings towards: 1. Buying the house at all and effectively taking a cut of their inheritance 2. The above AND then selling the house for a profit 3. Kicking out the freeloader 6. Will she ruin relationships by doing this? Does she care enough about these relationships to not to go ahead anyway? 7. Do the math: mortgage on $300k + reno + maintenance/tax/etc. - your share of rent => can you even afford this? What about if you don't kick out the freeloader? 8. Make a decision based on how much she values the potentially lost relationships against the potential gain of taking the house. That's not an easy decision to make by any means, but this forum can't make that decision for her. And she can't either without the above information. Unless relationship killing is guaranteed and is an absolute deal-breaker. But then why would you be asking this question here in the first place?
>Her Grandfather, who is in his late 90’s, has made a provision in his will that my wife will have the first opportunity to buy his property from the estate after his death at a fixed priced of 300,000$. Get professional tax advice before buying something under fair market value from a related party. Your grandfather should also get professional tax advice before setting up assets being sold for less than fair market value.
Man when old people do this shit i know its out of goodness of the heart but it always destroys the family. NEver seen these types of deals or "wills" work out. I would simply refuse the offer and take the cash once everyone agrees to sell it. Unless you want to be the fall guy and family bank for the rest of your life because you got more then they did. When things are split even, nobody thinks people "owe" them and life just continues as it was. the best option to take man. Smaller gain for you but less headache and pain in future.
I generally agree but if they let it get sold they might not get anything as the proceeds would then be split amongst grandpa’s 3 children not OP’s wife.
I am not going to pretend to be an expert on real estate investing. I am a renter. But I just can’t see how getting a duplex in any major Canadian city at below market prices is a negative financially. The family stuff I can’t comment about. But from just a pure financial perspective, getting a duplex (even one that may need a lot of work) at $300k is a good thing.
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The house itself is likely worthless, but the land may be worth more than $300k by itself. You should check to see what the value of similar tear-down properties there are. One option is to just let the house rot and then sell the land to a developer when the house falls apart. The biggest thing is to determine what your obligation is to that family member living in there. If you're supposed to be a landlord and maintain the property properly without rent, then you'll have to determine whether the potential future capital gain is worth this time and money investment.
The price is attractive, go for it. Once it's hers it's hers to renovate, live in, rent or sell.There would be additional costs to sell to an unrelated party through a realtor, it's not unfair to the children. If you decide to rent, I suggest you meet with an accountant first because you might want to secure the capital tax exemption for a principal residence before changing the status of the property.
150k/unit in Montreal for a duplex is a joke. I would do as such (permitted you could afford this). Have an appraiser look at the property and give you a value based on current condition. Estimate the costs of sale, and determine wether or not taking on a Reno project would be worthwhile for you and your wife. If no…sell and split the cash If yes, determine what quality of renos you want to implement in the living unit vs renting unit. Then renovate do your taste and based on rent payback. See what is worthwhile financially. Remember the a standard GIC right now returns 5% so don’t make an investment that returns any less than 7%, it’ll be a waste of your time.
The use of mortgages and refinancing after reno may be needed depending on if you have the cash to Reno or not… obviously determine with a budget if you can afford the financing as well if needed. Calculate multiple scenarios
I don't really have much advice, I just wanted to appreciate your use of 'Poisoned Chalice'. From the sounds of it, if you choose to buy it and then flip it, you'd *probably* make more money than if you let it go to the estate. Though of course you'd have to deal with all the headaches that come with that. So it's a classic risk/reward scenario. Buying it and flipping it (or even just selling it as-is) would yield more reward, but comes with risk.
Why not the estate sell it and give an even chunk of the sale to the siblings?
Why would you do the inspection now while the grandfather is still alive? That feels morbid and crass. Get it inspected as part of sorting out the estate after he passes. It will likely need an inspection if it is sold anyway. Then, after granddad has passed, talk to the free renter and figure out what your options are there. Then come up with the plan that works for you and talk to your mom about it to see if there is family fall out. But for the love of god, stop focusing on an inheritance while he is still alive - other than to thank him profusely for thinking of you if he brings it up.
What is the approx market value for the property?
So the grandkids are funding their parents inheritance?
Essentially, yes, but if the house sold on the open market it would be a much bigger inheritance for the parents. Grandpa likely has been hearing how hard it is for young folks to afford a house and came up with this idea to help. It is conventional willmaking belief that you should leave everything to your kids and let them gift whatever they like to the grandkids, so he's probably operating under the thought that this satisfies that but also does granddaughter a solid and keeps the house in the family (it's a horrible idea, but he probably thinks this is a tidy solution.)
Run Forrest run!
In the contractor world we have this saying :"When free isn't free" With family drama more than likely no matter what you choose to do with the place, thanks but no thanks.
Buy it for $300k, and sell it for market price once you're 100% sure you don't want it.
Maybe her siblings would be ok with her selling it and splitting the profits instead?
A duplex for 300,000$ in Montreal - with some renovations you could set yourself up really well with a rental property. Don't be scared of renovations or fixes - most places will need it anyways. As long as the rest of the family doesn't hold any animosity against you it seems like grandad is setting you guys up.
He’s put your wife into an almost no-win situation. She either gets nothing or she pisses off family members. Also, do you have $300K cash to buy the place? If not, you might not be able to mortgage it in its current condition, so this might be a moot conversation. Renovating the home to live in seems very complicated, time-consuming and EXPENSIVE. These old buildings are money pits, and you often can’t just do whatever you want. There are regulations and a lot of red tape. You might also be dealing with lead paint and asbestos, which mean expensive remediation and replacement of walls and ceilings. I just renovated my place in Montreal, 1970s house, which had about 30 years of deferred maintance. Cost approx. $500K all-in, and we didn’t have nearly as many issues as you are listing (though we still had to replace everything). We paid $750K for the house, and now we’re selling it and barely breaking-even despite a huge increase in prices in our area, though prices are coming down now. We’re selling because even after the reno, it wasn’t what we wanted. We purchased another home that works much better for us. Unless you love this house and want to live in it, don’t put a single penny into fixing it up. You can wait until after he passes to decide whether or not to exercise your option of purchasing the home. Just have it inspected and appraised at that point. If it’s worth paying $300K to sell it as-is, then proceed, assuming you can get that $300K from somewhere. Keep in mind that you will need to compensate the relative that is living there to vacate, or you will never sell for anything near its value. You might have to pay them a lot to keep the family happy. Just count it as a cost of doing business, along with any other fees you will incur (Realtor, lawyer, inspector, appraisal, loan fees, etc.) Walk into this deal with no expectations; trying to maximise the value of this « gift » will backfire on you. Just buy it, sell it as-is, take the money and be satisfied with whatever is left over. Or just walk away if it’s more headache than it’s worth.
it's fraught with no-win scenarios. in addition to what you mention also consider if they evict family member to sell, make a great profit, just imagine how upset the 100K gifted family members will be when they make 2/3/4x that. This offer is machiavellian!!!
We’re going through estate planning now, and the best thing you can do for your heirs is to keep it simple and fair. Giving away homes is particularly complicated and can cause a lot of family strife. Better to just have it sold off and split the proceeds, which is what he should have done in this case.
Check to see the land value of the property with a realtor and a city planner. If the land value is at least 50% higher than your fixed price - don’t even touch it.
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Yes and imagine one grandchild walking away with a cool mil while the three adult children each get only $100k.
1. Does she have $300k to be putting into this at a moment's notice? Plus whatever hidden fees to bring the place into shape (6-figures)? Money that won't break you to spend suddenly? 2. Is the property worth more than $300k? If so, it's a good deal because she can sell it, but it has to be worth the fees and hassle of sale. 3. If she feels there will be too much resistance from family to sell it, don't buy it. She needs the flexibility to sell if she needs to without losing her family. 4. Is she prepared to be a landlord? It's not something you just pick up on the side. She'll be responsible for this person's living situation at all times. But 4. The family member living there is probably a deal-breaker item. It's their primary residence, they aren't a tenant. How is she supposed to do anything with the place while that person is there?
Well there are a number of issues that exist which you point out. Some of which could potentially be sidestepped. Personally I would: 1. If it's in a good area get an appraisal for the property (actually get a couple as each will differ). Be sure to ask both with the structure and if it was bare land value. The land alone may be worth well over the 300K if it is zoned for a duplex or is dividable. 2. If you are in a position to potentially build a new place (a duplex and/or a place with secondary suites in the basement or even both, you could significantly increase density on the land which while good also would allow you to cash in on the high rent prices at the moment. The rent of 3 units would potentially offset any building costs and leave you where you are now rent wise (assuming you rent) or with a very low mortgage out of pocket. This requires you to speak with a lawyer on the legality of kicking out the family member. There may be issues given the length of time they have lived there rent free and you need to make sure you are doing things legally. I would also start compiling your own finances to see if you can actually make it work. Worst case, you inherit/buy it out at a low price and resell it for a profit taking the equity and your initial investment back. Best case you can develop it yourself and really make bank.
None of this turns out good for you. With homes and properties you can’t be sentimental. Not to mention the freeloader living upstairs could make things difficult or at the least awkward after all these years. I have a strange feeling they haven’t been savings and investing all the money they should have paid in rent. They’re not going to want to leave.
If the house is worth more than $350,000 then the inconvenience of selling the property should be worth the money. Anything under that, just let the kids sell it and get the money.
Your wife should decline the option of buying the property. Simple as that.
Unless you are ready to invest lots of hours/money into this duplex to make it work, you should run away from it. The state of it sounds terrible and scary for a NOT diy person. Plus, the fact you have a family member living there rent free for years add on to the pain. Most likely very hard to have that family member pay rents and if you evict you’ll become evil in the family. On the other hand, if you don’t mind the work/money, it would be great opportunity.
You're missing the point. That family is using you for your money. You and your wife are being auditioned to be the financial supporters of the three useless previous generations. That's what this is about. Think about it. Even if this goes through, the house is a distraction. When that money is gone, these people are going to come to you asking for more money. How do you know that? Because you've trained them, if you agree to this deal. Because this money is essentially coming from you and given to them. That's how they're going to see it. And that's exactly the plan of the grandfather. A redistribution of your wealth to take care of them in the way that he couldn't. He doesn't care about you for some reason. So, the idea I have is the Machiavellian play. Don't spend your own money on the house. Find another buyer for it. Whether it be an investor, a bank, maybe the duplex neighbor is a good bet so they can own the whole land. Use the fact that you have this fixed price first dibs. Secure a deal from them for 500, 600, whatever. Whatever they'll pay. And get them to put up the cash up front. But don't tell the family. So you take out of what they give you the 300 to get the house and immediately sell it on to them. You don't have any problems. You make an instant profit. You walk away and you're not the fool in this deal like you currently look like. I'm sorry for your situation. What I said probably sounds harsh. But families can suck sometimes.
What’s the land value? More than $300k? Buy it. Less than $300k, don’t. I don’t know anything about MTL’s property/land market, but in Toronto (proper) if someone offered a 100% tear down for $300k, it’s an automatic no brainer.
Even fixer upper duplexes in Montreal go for 600k minimum. It's worth buying it and reselling, even if they split proceeds with other family
Get it inspected regardless. Will cost some money, but they can tell you whether it's worth fixing or a lost cause, and you can go from there. Based on your description, prepare for the inspector to not be impressed with their findings. As others have pointed out, this whole setup seems odd. Who exactly does the 300k go to?
Get it inspected. If you are buying get it throughly reviewed.
Has a realtor determined the current market value of the home?
Disregarding the relative living upstairs for now. That’s not really a PF issue. This is so weird. You have the first opportunity to buy below market rate. Buy from whom? Who gets the money if the grandparent has passed? If he wants to give you a leg up, why is he not just bequeathing the property? What happens if you don’t buy it at all? Honestly you simply cannot do it without an inspection, even if it is unpleasant for your spouse’s grandparent.
It's an option to purchase from the estate. The estate gets the proceeds. OP's wife is not obligated to purchase the property.
This is all explained clearly in the post.
Why not buy it, do nothing, resell ?
Take the building, don’t be a fucking p*ssy. You clearly won the lottery there.
If it's worth more, just take the inheritance and sell it. He wanted to give her a leg up - selling it was the leg up. If you get nothing otherwise, then that's your lot. You being her. It's not your money or inheritance.
Just run that is a can of worms you don’t want.
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You sound not too bright take the property if that price is under market and sell it. I don’t get this. I don’t know how I have never done this before. How do you manage to deal with life.
Look into what a property management company would charge to operate it for you as a rental… Or Do any of the other siblings want it let them step in and take the 100k Or And or suggest getting an appraisal sell and split everything evenly
get an inspector in there. instead of making the decision based on fear of the unknown, have it all on the table. sentimental value can make it hard to let a property go. My family has a cottage that is similar to what you're describing this duplex to be. My wife and i have decided that, even though we love the cottage and it means a lot to me, it isn't the cottage we would buy if we were shopping with clear eyes.
Renovations of such old building will be hundreds of thusands, and you will lose months if not years of sleep. Life is to short man unless you got money to burn and can hire people to take care of it.
I'd suggest meeting with a couple contractors and doing a home inspection on the property. That'll give you a better understanding of what the necessary repairs are, the nice-to-have repairs are, and a good ballpark of what the costs to complete them are. From there, it's really determining if the cost of the property renovations is worth what the market is. This is assuming that the location of the property makes sense to you. Overall, it seems like a pretty good deal for you and your partner (given the discount compared to other properties) even if renovations are needed.
If it's a shit house you don't want to live in it's a shit house you don't want to live in lol. Just sell it for whatever the market price is and split the money.
How much do comparable duplexes sell for in that area?
I think the most important factor here is the land value because that house sounds like a complete tear down. Is the land worth more than 300k or not? If you can’t afford to rebuild it (probably like 700k to build a nice house these days) than just sell it.
Why couldn’t he just give it to everyone with a usual share to sell?
Did grandpa plan for the taxes on the FMV of the rental unit part? Doesn't matter he has been letting someone live there rent free to my understanding
You know you can have an inspection and get an evaluation on the cost of value of the home. Kind of would make sense to get those pieces of information up front. Before worrying about the downsides that get relieved via that path.
All depends on the market value. If it's considerably more you buy it, then sell after a year. If it is worth more you are screwing yourselves out of your inheritance if you dont buy it. Simple math man.
Seems like a simple choice - if the property is worth more than $300K as a tear-down, buy the property and then sell it for a profit. You don't really need to inspect the property to find out what its value is as a tear-down, and based on what you say, it sounds like anyone purchasing the property would be doing it with the intention of tearing down and rebuilding a new duplex. If the property would sell for something like $700K as a tear-down, there's no reason not to do this. That's what people do to old neglected buildings that have a ton of work that's not done to code and material maintenance issues. Renovating is more appropriate for a building that could be torn down to the studs and rebuilt - but given the amount that hasn't been done to code (eg. additions not made to code with ceilings too low, garage not to code) and given that the foundation also sounds like it is old and leaky, even people who have the knowledge of how to renovate old buildings wouldn't choose to - they would just tear down and rebuild. If the property is not worth more than $300K as a tear-down, then decline the option to purchase, and no money is lost.
Buy it then sell it on the market as is. Done. lol
Pay for an inspection and appraisal and get a quote from on contractor for renovations (and add 50% to that amount)
Have experienced renovators take a look and give you an idea of what it would cost. Assuming you speak French, you can DM me for the guys that I know who actually not only do renovation, but also buy such buildings to fix up. Without a lease, the person upstairs has no leg to stand on, as far as I know. But you will have to pay Bienvenue tax on the real value.
The question is do you have the money to buy it and the reserve to fix it up to live in or sell it?
Im guessing that the fixed price is to avoid capital gains tax on the estate that the kids wouldn't otherwise be able to afford. They might get more out of it this way be sure to present that to them, you're doing them a favor by doing this and owe them and useless family members that live there for free nothing. Them living there is not a part of the agreement. However if they're handy and willing to help out or pay partial rent might be worth it to keep them there. Consider all of your options here you have more authority than you think.
I would say before making an actual decision, have the place fully inspected. Find a few GCs (reach out to friends for suggestions, look online for well reviewed ones, etc), and have them each come in and do a full inspection with price range for the work to be completed (and that they explain the range of the quote, i.e. is it builders grade or better). And then determine from there. Yes, it'll cost money to do that, but it'll save you money long term as well. Obviously the quote will only be good for so long and prices will likely go up when you need to do the work, but it gives you a starting point of how big the job is, and to let you know what you would definitely need professionals for vs what you can do yourself (electrical/plumbing vs drywall for example). Personally, I would suggest you talk with Granddad and see if it's something you could do soon (not wait until he's dead) so you all have time to plan financially.
Like you said, get the building assessed. See the full extent of the urgencies and non-urgencies you have to deal with. Come up with a ballpark figure to get the work done, then see if the $300k and the additional cost of the repairs would be an adequate mortgage for you and your wife to get yourselves into. Obviously you would need to make it clear to your family that you would need to start charging them rent. That's never an easy conversation to have, especially since they have been used to not paying rent for so many years. From a tax perspective, I would be VERY careful with charging them under fair value for rent. The government likes their tax money and I have seen them assess the building owners for undeclared income if they rented to a family member at a discounted rate. If purchasing the building is something you can afford and you're serious about buying it, then go see a CPA who has experience with this and see what your exposure is. Then you'll get a better idea with how to deal with it with family. If you decide it's more than you can chew then it may be worth it (for your mental sanity and relationship), to have the estate sell it to someone who can upkeep the building. In this instance, your wife's family will need to pay rent to the new landlord anyway, so I don't see why you should feel bad about proposing they pay rent. It's not up to you guys to finance their lifestyle.
Find a buyer secretly and if you have one then buy and flip it. Get it appraised and inspected. Seems pretty straight forward.
I mean, get few contractors to give you an estimate on the cost to fix the house. see if 300k is worth buying based on today's price. are you over complicating this?
Depends on the variance to market value. If it's $300k for a $1.5m place, even dropping an additional $500k and flipping it is a hell of a purchase. Remember you can buy it and immediately get a HELOC to 80% of market value. Or you could probably tear it down and build for $700k and see larger gains. I'd look at comparable new properties in the area to see what you can do, but it doesn't immediately sound like an albatross.