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Help for my mom and dad

Smitty

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Hi Everyone:
Just seeking some thoughtful advice on a situation that is very stressful for my parents. (particularly on my mom)

It`s a situation that a lot of you have probably heard before; my parents have reached an age where they would like to downsize, and more importantly, have condo-like lifestyle with little yard maintenance.

So they bought a nice half duplex in Magrath (SW Edmonton that`s very new and a nice neighborhood) that is to be completed late May. And of course, the house that they are selling, is not worth what it was 1-2 years ago. So now they`re in a bind because the selling price of the current home won`t pay for the new home, and that is very worrisome for them, because they`ve worked very hard all their lives and lived in a paid off home for many years.

So rather than follow the realtor`s suggestion of lowering the list price of the current home, I now have them discussing the possibility of renting out the new home. The new home is very nice, with lots of upgrades, fully finished, I bdrm up, 2 bdrm down, all maintenance taken care of. My mom and dad paid $735K.

My question and assistance I am seeking is, what is the current market like to "super-suite" this house and rent it out, fully furnished with all utilities included (including the shaw pkg of tele, internet, and tv). Is there a market in Edmonton for these "executive-type" rentals out there? The mortgage on the new house will be in the $2500 range, and so with all expenses paid for by us, we`d likely need $3000 of rent. If the super-executive-suite is a possibility, could someone provide some direction on how to market/advertise this place and to whom I am targeting?

So, I guess to conclude, I really need some help on deciding:
(1) Is this plan realistic and (2) How to determine the right approach and strategy. If anyone has any contacts in the area of property management, realtors, human resource people in companies, please send them my way.



Thank-you very much in advance, my mom and dad really appreciate your help,

Mike Smith
pm me or, 780-970-7886, or [email protected]
P.S. I am not intending this to be an "ad", we`re not looking for anyone here to buy or rent, I just need some help.

Thank-you very much!
 

Fortuneinvesting

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QUOTE (Smitty @ Apr 16 2009, 03:13 PM) Hi Everyone:
Just seeking some thoughtful advice on a situation that is very stressful for my parents. (particularly on my mom)

It`s a situation that a lot of you have probably heard before; my parents have reached an age where they would like to downsize, and more importantly, have condo-like lifestyle with little yard maintenance.

So they bought a nice half duplex in Magrath (SW Edmonton that`s very new and a nice neighborhood) that is to be completed late May. And of course, the house that they are selling, is not worth what it was 1-2 years ago. So now they`re in a bind because the selling price of the current home won`t pay for the new home, and that is very worrisome for them, because they`ve worked very hard all their lives and lived in a paid off home for many years.

So rather than follow the realtor`s suggestion of lowering the list price of the current home, I now have them discussing the possibility of renting out the new home. The new home is very nice, with lots of upgrades, fully finished, I bdrm up, 2 bdrm down, all maintenance taken care of. My mom and dad paid $735K.

My question and assistance I am seeking is, what is the current market like to "super-suite" this house and rent it out, fully furnished with all utilities included (including the shaw pkg of tele, internet, and tv). Is there a market in Edmonton for these "executive-type" rentals out there? The mortgage on the new house will be in the $2500 range, and so with all expenses paid for by us, we`d likely need $3000 of rent. If the super-executive-suite is a possibility, could someone provide some direction on how to market/advertise this place and to whom I am targeting?

So, I guess to conclude, I really need some help on deciding:
(1) Is this plan realistic and (2) How to determine the right approach and strategy. If anyone has any contacts in the area of property management, realtors, human resource people in companies, please send them my way.



Thank-you very much in advance, my mom and dad really appreciate your help,

Mike Smith
pm me or, 780-970-7886, or [email protected]
P.S. I am not intending this to be an "ad", we`re not looking for anyone here to buy or rent, I just need some help.

Thank-you very much!


I`ve been watching rents in S. Alberta and it seems all the cheaper ones are going first. the ones above 1700 are sitting a while. There`s always a market but its just very small at the moment I would think
 

Nir

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It`s unfortunate and I am sorry to hear that on one hand they wanted to "downsize" on the other hand they have not downsized. they purchased a property (before selling) that is now worth more than where they live!

I agree with the downsizing idea. have you considered paying the penalty and buying something else that is significantly lower than what they own. do it by the book - sell, then buy and retire peacefully. it might be worth tens of thousands in penalty, not sure if this is the case though. don`t close(?)
 

Smitty

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Investsmart:

Haven`t considered canceling the contract, and knowing my parents, that is simply not an option due to the legal problems it could create. Its more than just a payout penalty. If it were a matter of a payout penalty, they might as well just lower the price of the home they are selling.

To all:

I guess what I am looking for is someone who knows the Edmonton market fairly well in this niche type of rental situation and could provide some advice and/or some contacts in this area.

Mike
 

Nir

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Hi Mike, If it is just a legal problem, can you at least contact the builder "behind the scenes" if you know what I mean. see what the builder has to say, perhaps he`ll/she`ll surprise you with an option or two. well, I understand that is not what you were looking for. good luck!
 

TerryKruse

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There was a topic: Vacant Furnished Units in Edmonton Help request, Any suggestions for furnished rentals? This was just a few days ago.

The home will cost more to furnish, the furniture will get wear and tear, there is more management involved and it takes a longer time to get good tenants. They will not shut lights off when they go out... or turn down the heat at night.

I have foreign workers in 2 sides of a duplex in Calgary. Things are going well right now but I have had problems in the past. More management is required for this type of property. Even with good tenants vacancies are more frequent.

Maybe it will work out for you as a executive rental but it requires more money and time.

That is just my experience.

Good luck, Terry
 

Thomas Beyer

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QUOTE (Smitty @ Apr 16 2009, 03:13 PM) ...The new home is very nice, with lots of upgrades, fully finished, I bdrm up, 2 bdrm down, all maintenance taken care of. My mom and dad paid $735K...A very high risk strategy .. gross income of $30,000 in a year .. and potential damage exceeding $100,000 ..

I`d not
do that !!

(in the current slow sales environment one should not buy a new home before selling the old one)

List at an aggressive price .. and sell it !!
 

mcgregok

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QUOTE (Smitty @ Apr 16 2009, 03:13 PM) .. And of course, the house that they are selling, is not worth what it was 1-2 years ago. So now they`re in a bind because the selling price of the current home won`t pay for the new home, and that is very worrisome for them, because they`ve worked very hard all their lives and lived in a paid off home for many years.

Thank-you very much!


Renting a new home is to risky for me. You will never get it back in new condition. If you feel you just have to rent, rent out the older home and move into the new condo. Your parents can at least enjoy the new home. Maybe try lease to own, jv or other creative methods to rent your property with options to sell.
 

bizaro86

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QUOTE (mcgregok @ Apr 17 2009, 06:41 PM) Maybe try lease to own, jv or other creative methods to rent your property with options to sell.

This seems like a potentially good idea to me. Could they sell their current home with vendor financing, and then use the enhanced terms to get a better price? If they offered to take back a second mortgage for XX years at 1%, that would be worth something to many potential buyers. Maybe they could offer to finance the entire purchase for a well qualified buyer at a below market interest rate. Granted, the payments probably wouldn`t cover their new payments, but they`d be better off than they are now, and when their buyer refinanced in a few years at the end of the term they could cash out.

Ultimately, this probably isn`t a solution where they can make money, but more likely try to limit the financial damage that has already been done.

Michael
 

Smitty

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Well:
Definitely some food for thought here. I appreciate the replies.

I am assuming by your post Thomas, that a lot of the risk is due to the fact it is a high end home, and therefore more potential damage can be done? That makes, sense, there is only so much damage you can do to a 75K apartment vs a 750K home. However, you can mitigate - not eliminate - some of the risk by doing a lot of due diligence on prospective tenants, having frequent inspections, generally keeping an eye on things, which we would all do. Is there a reason is you picked a number like 100K? Apartments/condos aside, you could do 100K damage pretty much to any SFD. Wouldn`t that be an argument from renting out any
home?

I think a rent-to-own might be something viable to at least explore, I`ll look into it.

If I seem hesitant about selling outright, its because for 2 reasons. (1) Absolutely terrible time in Edmonton to sell high end homes, and (2) my parents won`t want to take a loss a house that really, they want to move into. But, my mom is pretty distraught over this, so perhaps the one time immediate pain of selling the new one for a loss and just moving on is the way to go.

Or, take the realtor`s advice, drop the list price on the one they`re selling by 30K to 50k and find a buyer. But that will hit them hard; if the price they`re selling the new one isn`t covering the price of the new they bought, they have to come up for the difference, and that will hit their retirement funds hard. As if the stock market didn`t kick those to the curb hard enough already.


Arghh. Sucks being a motivated vendor, in a buyers market.

Keep posting if you have any more ideas.

Mike
 

mcgregok

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QUOTE (Smitty @ Apr 22 2009, 12:34 PM) Well:

Definitely some food for thought here. I appreciate the replies.

I am assuming by your post Thomas, that a lot of the risk is due to the fact it is a high end home, and therefore more potential damage can be done? That makes, sense, there is only so much damage you can do to a 75K apartment vs a 750K home. However, you can mitigate - not eliminate - some of .Keep posting if you have any more ideas.

Mike

Can you post more details on the transaction. How much is their present selling for. How much do you require from the deal? What do your parents need to feel good about moving to their new home? I take it the $75,000 apartment you are using is an example and not what your parents are living in now?
 

vandriani

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I don`t understand why you are not entertaining the rental of the existing home. Why not get it refinanced and use that money to purchase the new home. Rent the current home and use the rental money to pay for the mortgage of the new home. Wait for a couple of years until prices go up again (probably...hopefully) and then sell. This way your parents would enjoy the new home. The key would be to maximize the income by renting at top dollar and finding other revenue opportunities while reducing costs (self management).
 

Nir

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QUOTE (vandriani @ Apr 22 2009, 02:14 PM) I don`t understand why you are not entertaining the rental of the existing home. Why not get it refinanced and use that money to purchase the new home. Rent the current home and use the rental money to pay for the mortgage of the new home. Wait for a couple of years until prices go up again (probably...hopefully) and then sell. This way your parents would enjoy the new home. The key would be to maximize the income by renting at top dollar and finding other revenue opportunities while reducing costs (self management).


Interesting idea Vince,

The issues I see are (Mike, correct me if I am wrong):
- I am not sure if Mike`s parents can qualify for the mortgage required to purchase the new home unless they sell their current one.
- if they can do that, why keep & rent their current home and not sell & buy & rent out something else!? (in addition to moving to their new home as mentioned). If they start renting (meaning if they are into rental business), then buy the best you can for the same amount of money! Their current home is most likely not the best rental property available for what it`s worth as this was not their initial intention when purchasing it years ago.
- Re investment property: Yes, bad time to sell UNLESS you sell in order to buy something better.

Bottom line I really like your idea (if feasible), just with a different property.

Cheers,
Neil
 
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