Should my parents sell their House that’s already paid off?

[jt88488]

Hello members:

My parents are selling their principal single-family residence (that has no mortgage for $675k) and a convenience store business ($200k) to go into retirement. They explained that they were going to then buy a condo, near downtown, to live in and to buy some investment properties for cashflow as a supplemental income with their pension. I would like to know from other experienced investors if there are other options that would be more beneficial for them.

What are some other scenarios that my parents should be considering to leverage their circumstance?

Should they hold on to the principal home for rental? It is in a desirable area in town.

Is it a good idea to use the equity and leverage it someway?

In the Vaughan, Ontario area:

4 br / 2.5 ba + den

3,500 sqft (corner lot 10,000 sqft)

- no upgrades

- partial basement

- built in 1980`s

I appreciate any suggestions and recommendations. Thank you

~JT

 

[FayWong]

QUOTE (jt88488 @ Apr 25 2008, 10:59 AM) Hello members:
My parents are selling their principal single-family residence (that has no mortgage for $675k) and a convenience store business ($200k) to go into retirement. They explained that they were going to then buy a condo, near downtown, to live in and to buy some investment properties for cashflow as a supplemental income with their pension. I would like to know from other experienced investors if there are other options that would be more beneficial for them.
What are some other scenarios that my parents should be considering to leverage their circumstance?
Should they hold on to the principal home for rental? It is in a desirable area in town.
Is it a good idea to use the equity and leverage it someway?
~JT
If this wasn`t your parents property, if you were buying it as an investment with 20% down and a mortgage would it cash flow? A different property with the same numbers, would you buy it? A wonderful home isn`t always a wonderful investment. If the numbers don`t work as an investment their plan is a good one. If the numbers do work they could finance the property but could they treat it the same as any other investment propety? I ask this because it is very difficult to treat a home you have lived in and loved objectively. How would they feel if tenants didn`t keep the home as they did? If they inspected the home and found it dirty? or cluttered? or even just empty of their precious nick-knacks and things. I couldn`t do it, but if they could and the numbers worked then use if as one of their investments. If the numbers don`t work don`t even consider it. Sell it to someone looking for a home who will love and care for it. A renter cannot.

 

[jt88488]

QUOTE (FayWong @ Apr 25 2008, 11:21 AM) If this wasn`t your parents property, if you were buying it as an investment with 20% down and a mortgage would it cash flow? A different property with the same numbers, would you buy it? A wonderful home isn`t always a wonderful investment. If the numbers don`t work as an investment their plan is a good one. If the numbers do work they could finance the property but could they treat it the same as any other investment propety? I ask this because it is very difficult to treat a home you have lived in and loved objectively. How would they feel if tenants didn`t keep the home as they did? If they inspected the home and found it dirty? or cluttered? or even just empty of their precious nick-knacks and things. I couldn`t do it, but if they could and the numbers worked then use if as one of their investments. If the numbers don`t work don`t even consider it. Sell it to someone looking for a home who will love and care for it. A renter cannot.

Thank you Fay, you have a very good point.