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Home > Risky idea might corrupt family dynamics. Long- but I need opinions.

Risky idea might corrupt family dynamics. Long- but I need opinions.

December 12th, 2013 at 08:17 am

My brain started going last night. I couldn't turn it off. I was thinking about something. Something that might be... BAD? Mean? Or it could be AWESOME.

So the California chapter is slowly closing and I'm optimistic we will recover the remaining debt owed.

Last night my mind turned to the other colossal financial mistake I made recently.

That would be the rental property that I bought, renovated, turned it into a FANTASTIC rental and then gave it to my FIL for exactly what was paid so he could get into rentals.

Benevolent intentions.

Where it got completely F---ed up was the fact that FIL couldnt afford to buy it from me for exactly what I paid.

Ugh. The problem was that FIL was going through a huge divorce and he was panicked about money. He was the primary breadwinner and it was looking like they were going to liquidate all assets for losses or break evens (during the real estate downturn), the wife was going to get half the pension and a large chunk of cash for several years beyond his retirement. He was really panicked and we were feeling really bad about it all.

FIL makes almost a quarter of a million a year.

We were into the property for $155k.

So FIL asked if he could have this brand new fantastic property because it would be his salvation. It had already appreciated like crazy, and it is bringing in $1800 a month.

We thought we would take the $155k and find a new property.

But FIL paid me in small and large chunks of cash as he got it. $30k here...$4k there...$1k today...$1600 next week...

The chunks made it hard to track, and REALLY hard to save, and IMPOSSIBLE to re-invest in another property.

Its been over a year now and:

*We have spent all money FIL gave us towards the purchase. Not sure where it all went...some was spent in California, we had our roof replaced, bought a truck, ...not sure where the rest went.

*FIL divorce finalized. He's not coming out as bad as he thought.

*FIL still owes me $44k for the purchase.

*For the next 2 yrs FIL has to pay MIL yearly payments of $40k and then alimony is paid. So he owes MIL $80k and then he is out of the divorce.

*FIL has found a girlfriend, and PURCHASED a house in another state for girlfriend and him to live in (she does not work). FIL had to borrow $32k from a relative to use as down payment for this house and is on a 2 year repayment plan to pay it back.

*FIL has bought a $10k boat.

*FIL was just visiting us and is discussing buying a new truck. His truck is unreliable and he is debating buying and financing vs lease.

*FIL has decided the remaining $44k will be paid back through the monthly rent the property collects. So after expenses, the property collects about $1400/month and when it reaches $44k- that money is mine and property will be transferred into his name. So new payoff date is January 2016. -2016- So this property will have been tied up for 4 YEARS by the time it is finalized.

*Shortly after "buying" the property from us, he asked my husband's opinion about if he should sell it (it has appreciated about $75k). Husband was outraged and told FIL he can NEVER sell the property because it is a cash cow and the reason we agreed to the transaction was that we are planning to inherit it. (we had not thought that far into the future...but yeah- we were expecting it to stay in the family, otherwise we would have sold it at a profit) FIL agreed to not sell it. We have since told FIL he can never take out a HELOC on it either.

*FIL is taking the $1800/month rental income into consideration when discussing his retirement plan (he plans to retire in 2 years).

So those are the variables that have gone down since this whole thing started last year.

Needless- we assumed FIL would pay us within a year considering he makes so much money. But that didn't happen and its my fault I made assumptions instead of plans with FIL. It didn't occur to me this could get so messy. It didn't occur to me he would be so cash poor. It didn't occur to me he would also borrow from other family members to rebuild and now owes money to 3 different people.

So this whole thing weighs on me. Daily. Makes me angry. Frustrated. Bitter. Hearing about his plans to finance a truck this week made me upset.

Ok, here is where my mind went last night:

If I pool all my liquid cash from different accounts, including our tax refund, collecting the remaining Cali money owed to me, and some money coming in February...I can pull together $107k.

We "sold" the property for $155k. FIL still owes $44k. So FIL has paid us $111k.

We actually could offer to BUY THE PROPERTY BACK from FIL.

This could be awesome.
FIL owes $32k to a relative.
FIL owes ex wife $80k.
FIL wants to buy a new truck.
$111k could pay off a good chunk of that debt.

Husband and I NEED to increase our monthly income. We don't have enough liquid cash to re-invest in another property. Even when FIL pays us his debt in 2 years we still wont have enough to re-invest in a property.
Neither of us is working- so we do not qualify for a mortgage or HELOC to get us anything extra to buy a property.

Husband and I cannot save liquid money. Our track record is terrible. If we dont re-invest this $107k it will get spent on frivolous things. I need to tie it up in an income producing investment before it gets spent on stuff.

This property brings in $1800/month and neither FIL or us is getting the money. It's getting placed in an account to be paid to me when it reaches payoff amount. So for 4 years neither of us is really utilizing the rental income.

I brought up the option to approach FIL with a request to buy the property back and husband doesn't think FIL will be interested. Its such a cash cow that it would be stupid to unload it. The property pays for itself in 5 years and is in good enough condition that things wont start needing repairs or replaced for 5-7 years.

But maybe FIL has been kicking himself for taking on such a debt during a time when he needs liquid cash? Maybe he thinks about it daily and he gets upset thinking of how he really needs that cash that he has been paying to us? The same way I think about it daily and get mad that we gave away such a large monthly income and we cannot afford to replace it?

So...how can I approach him about this?

Is it a SHITTY SHITTY thing for me to approach him about?

Long term this is a great investment. And I feel I would be manipulating him/taking advantage of his current debts owed to people to take the long term earning opportunity away from him.

But I REALLY want the property back. Husband and I are really disappointed and angry about how this transaction became so dirty.

So opinions? Be honest. Convince me not to pursue this if it is going to cause bad blood.

Here it is. Does not help that I am REALLY emotionally attached to it.

11 Responses to “Risky idea might corrupt family dynamics. Long- but I need opinions. ”

  1. creditcardfree Says:

    How can just talking about the idea be so bad? It is just an idea. If he says no, then you are in no worse a place then you are today. I would definitely approach him, but casually, not forcefully. Would using all the liquid cash you have put you in a bind though? It seems good to have cash on hand. We ALL need an emergency fund.

  2. Petunia 100 Says:

    There's nothing at all wrong with you asking FIL if he would like to sell it back. He is a big boy. If he wants to say "no", he can say "no". But if it goes that way, I think you should be willing to accept "no" as an answer.

    Have you considered owning it jointly with him? Perhaps you could offer to buy half, and split future rents and expenses? So instead of him owing you 44k, you would pay him 33.5k now.

    He would have 33.5k, no more debt to you, and half the net income immediately.

    You would have 33.5k less liquid cash, a half-interest in the property, and half the net income immediately.

    It is a cute place.

  3. PatientSaver Says:

    Nothing wrong with it at all. Next time you deal with family, make sure everything is in writing and spelled out to a "T," just like you would with anyone else.

  4. TashaC. Says:

    for some reason husband is really reluctant to entertain this idea. He does not think his dad will go for it. I agree I need to bring it up and expect a "no" answer, so I'm not disappointed and it does not cause resentment later.

  5. Jenn Says:

    When it comes to business partners, you can really pick 'em... I don't understand your guilt. He hasn't paid you for the property as agreed. I'd would be more direct - either you complete the transaction of selling it, or cancel the deal and give him his money back.

    And if you're thinking "but he's family", ask yourself why HE's not thinking that. I mean, would you take advantage of a family member the way he's taking advantage of you?

    The property is gorgeous - I can see why you bought it.

  6. Rachael777 Says:

    Oh my God.. DO IT! Fantastic creative idea and cash flow is king. This guy does not see that and this house is a waste on him.. you are thinking long term...besides with buying a boat.. car .. whatever else.. new girlfriend.. he has cash (which he is not giving you!). I would be pissed and upset too. I suggest you offer this as something that may help him.. 'hey we understand you are in debt etc... our expectation was NOT to wait 4-5 years to get paid for this property (helloo!) we would like to buy it back.. $110 cash (or start lower).."

    Go for it Tasha. Great job!

  7. looking forward Says:

    I'd talk to him.
    Are you still the legal owners? Any paperwork or contracts that state FIL is purchasing this property?

  8. wisewoman Says:

    I understand your frustration. You were trying to do a good deed. Present it in a way that he is coming out ahead (cash in pocket to use toward a new vehicle, etc).

    It's a beautiful home. I understand your attachment.

    Good luck!

  9. TashaC. Says:

    Well your responses are encouraging. Its true that it does not hurt to ask. Unless he takes the offer and regrets it in a year the way I currently regret the original transaction. I agree that if this was a stranger or business partner it would be unacceptable to hold the money hostage like this. But with family you have to tread carefully. I guess it would not be unreasonable to ask him to get a mortgage for the remaining $44k. But actually I wouldn't ask that. Its going a little too deep into his personal financial business. Anyways, I've brought up the topic to husband 3x and he just shrugs and says "ok" to get off the subject. So husband really does not want to pursue this. Maybe my gut instinct was right and this will cause bad family blood. Hmmm... rather than trying to get it back, maybe I need to find a way to let this go. I'll bring it up to husband once more tomorrow and if he still does not want me to talk to FIL, I'm going to try and forget it.

  10. Rachael777 Says:

    Tasha.. before you let this go.. or assume your husband's 'ok' is a sign he is against hte idea.. I suggest you think that there is no risk in asking.. basically all you are saying (toned down from my before).. 'Hey are you interestd in just selling the house back to us.. we have $100k now"

    Nothing to hurt by asking and I KNOW you are excited even thinking of the idea of owning that house again. I would be.. a HUGE step towards your goals of cash flow.

    better to ask then forever wonder and be upset..

  11. TashaC. Says:

    Thanks Rachel, I am still keeping it in the back of my brain. I need to let husband brew on it for a few days. I am very happy to approach FIL about it but I need husband on board. Once he hears "we cant afford it" enough, he will want to increase our income.

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