I'll try and keep it to the point....just over 4 years ago my husband and I purchased a rental property for a family member to live in. (yes we have a rental agreement) The family member had agreed to gift us a sum of money to pay a small debt so our bank would let us refinance our home for 100% finance of the rental. The family member had in the previous 18 months spent over $100,000 from a divorce settlement and was down to their last $12,000 when we offered/suggested they lent us the 10k to pay off a debt to re finance and buy the rental so they could live in it and pay minimum rent to cover expenses. We have been paying the power and the phone for this person for the past 4 years also along with vehicle costs and other expenses. If we were to sell the property which the family person as no legal tie to, we would pay back the 10k we were gifted to pay off our debt and if the property had doubled in value pay the same percentage of the increas in value so the family member would in fact nearly double their money in less than 5 years. Does this sound fair? The 10k was 9.09% of the value of the property which was $110k just over 4 years ago. Now it could be worth around $180 to $200K.

My initial thought is that if you're paying back the $10k plus interest tied directly with the property value increase then that could certainly sound fair.

I presume the family member would be happy to agree to such a sale?

Also, sounds like a stellar family member, if they had only $12k but gifted $10k to you.

when the family member loaned you the 10K it wasn't an investment into the property. so, in my opinion, you don't have to pay at property value. imagine if things had gne the otherway; the property depreciated, would the family member accept less than 10K because of the depreciation?
I think you should just pay at the level of interest you agreed on the loan.

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adverse credit mortgages