My mother owes 79k on her home, one sold in her complex (2b2b, g) for 325k. She has never really had much liquid cash, so she wanted to sell the place and move in with me. Currently she pays 800 bucks a month mortgage.
I was thinking would it be a good idea to allow her to quick deed the property to me, allow me to get financed for 300k. Take out a second heloc or refi and give her 200k(she was going to give me the other 25k). Then she would get what she expected to walk away with(about 200k), I would own the property. Since she would give it to me at below maket, I would have equity, and could rent it for positive cash flow.
Does this make since. I would like the opinions on the subject.
Thanks
Curtis
Number of problems, Curtis.
First, just because a property in the neighorhood sold for X amount, doesn’t mean that your property is worth that amount. Since, you said “complex” is this a townhouse/condo? Is it comparable to the property that sold? Are there others for sale? What is the days on market for them to sell? Alot of info needs to be provided before you know that you have something worthwhile here.
Second, if you refinance for $300K (assuming that it’s actually worth $325K), then you DO NOT have any equity left. $25K is not equity. Heck, that isn’t even a decent cushion for the “oops” factor.
Third, are you sure that you could rent it for positive cashflow? If you refinance for $300K, then you payment is going to be somewhere between $2000 and $2800 per month, depending on your interest rate and taxes/insurance/hoa dues (assuming a 30yr term). Do things rent for $2-3K per month in your area? That’s also not taking in all of your rental woes of maintenance, vacancy, repairs, etc., which most landlords allow up to 50% of gross rents. Do things rent for $4-6K in your area?
Raj
first, why does Mom need $200,000? She got an old bookie debt to settle up?
Unless there’s some reason why she NEEDs to sell the place, why give up that $800 a month mortgage payment? Refi the balance $79k and drop the payment further, and turn it into a monthly cash cow.
If she really needs cash, refi for 79 plus what she really needs, keeping in mind that it will begin producing monthly cashflow.
LOL. That is funny. Actually she is unable to go up and down the stairs in that place. But you are right, she is not going to find that $800 a month mortgage anywhere else.
I do not understand what you mean " refi for 79 plus what she really needs, keeping in mind that it will begin producing monthly cashflow". She only owes 79k. The market value of the property is 325k.
She has never had any large sum of cash and wants to travel, and see the world.
so refi for 100k. she has $20k to travel. plus she has a property worth 325 with a 100k mortgage that’ll generate several hundred (or more) dollar a month free cash flow AND still appreciate in value AND still be available if she needs to sell in the future.