Hi there my Mother is trying to make a real estate decision and is looking for advice.
She is getting a bit old at 70, and is having some trouble keeping up with an older house of 40 years.
She has some debt to pay off around 40k mortgage and 20k low interest cc debt.
No savings but has a decent pension income of around 30k/year.
We are considering a few different options but are not sure which is most wise for her age and for investment purposes. I'm just not sure how to frame the problem correctly.
1) Stay in the house:
She has enough pension income to pay her monthly bills but has little left over for enjoyment.
However it is an old house and things break down and she cant fix them, and realistically she only uses a couple rooms in it.
2) Sell the house (~300K) and buy an apartment for herself
Sell the house for 300, buy an apartment for 150, pay down her debt of 60, leaves her with 90 for investment/fun. My only concern here is that buying might be a hassle if she is going to enter a retirement home in a few years.
3) Sell the house (~300K) and rent an apartment for herself
I don't like this so much because she loses all the rent money she is paying and will have a lot of money just sitting around doing not much.
4) Rent the house and buy an apartment for herself
Would most likely hire a property manager. I like this option because she can always move back if she wants.
5) Rent the house and rent an apartment for herself
Would likely hire a property manager. I like this option because she can always move back if she wants.
For investment purposes I am thinking it might be best to rent the house out, and use that income to help pay for the mortgage on a new apartment. I think this would give her a much higher rate of return than selling the house and parking those funds in some low risk/no risk investment option. Although not actually sure if she can afford to buy an apartment without selling the house. what would she use as a down payment? Increase the mortgage on the house?
On the other hand I think she might just need simplicity. Sell the house, buy an apartment, no hassle..
What do you guys think? Is there a clear winner here? I am happy to provide more info if necessary.
Thanks a lot!
She is getting a bit old at 70, and is having some trouble keeping up with an older house of 40 years.
She has some debt to pay off around 40k mortgage and 20k low interest cc debt.
No savings but has a decent pension income of around 30k/year.
We are considering a few different options but are not sure which is most wise for her age and for investment purposes. I'm just not sure how to frame the problem correctly.
1) Stay in the house:
She has enough pension income to pay her monthly bills but has little left over for enjoyment.
However it is an old house and things break down and she cant fix them, and realistically she only uses a couple rooms in it.
2) Sell the house (~300K) and buy an apartment for herself
Sell the house for 300, buy an apartment for 150, pay down her debt of 60, leaves her with 90 for investment/fun. My only concern here is that buying might be a hassle if she is going to enter a retirement home in a few years.
3) Sell the house (~300K) and rent an apartment for herself
I don't like this so much because she loses all the rent money she is paying and will have a lot of money just sitting around doing not much.
4) Rent the house and buy an apartment for herself
Would most likely hire a property manager. I like this option because she can always move back if she wants.
5) Rent the house and rent an apartment for herself
Would likely hire a property manager. I like this option because she can always move back if she wants.
For investment purposes I am thinking it might be best to rent the house out, and use that income to help pay for the mortgage on a new apartment. I think this would give her a much higher rate of return than selling the house and parking those funds in some low risk/no risk investment option. Although not actually sure if she can afford to buy an apartment without selling the house. what would she use as a down payment? Increase the mortgage on the house?
On the other hand I think she might just need simplicity. Sell the house, buy an apartment, no hassle..
What do you guys think? Is there a clear winner here? I am happy to provide more info if necessary.
Thanks a lot!