Advice/resource for Senior with two properties

Advice/resource for Senior with two properties

Portland, OR · Member since 2015 · 37 posts · 11 votes
Hi, I'm not sure where to put this post, I'm looking for either some advice or a Portland Oregon metro area real estate/financial advisor for seniors for my grandmother. She currently owns a rental property, and a property with acreage that she occupies. The rental is in ok shape but needs to be renovated fully, the renter in there owes her about 7k in back rent, as my grandmother has been mismanaging it for years. In my opinion it usually costs her more money than it brings in on average, but she thinks she can't afford to live without it. The property she lives in herself is in complete disarray and quite literally falling down around her, she is also a hoarder with pets so the place is a disaster and needs to almost be rebuilt from scratch. The two properties as is are probably worth around 500k, with renovations of maybe $150-200k between them she's probably sitting on $800k of value. My thought is that she should sell as is and buy a little apartment in a 55+community, (she's in her late 70's). Or buy a little house on a tiny lot and hire help. Her fears are that she will pay taxes if she sells, that she will run out of money without the rental income, that she'll hate her life if she moves, that she'll miss her friends. I fee if she invests the amount above purchasing the new property properly it should last the balance of her life ( her family usually lives to around 90-100 so it's a lot of years statistically left). Is there a better option? Should we figure out how to have her renovate first so she can get more value and how would someone on Social Security do something like that? I've considered trying to buy and flip the properties myself as they would have good profit but I'm afraid to undertake that as I'm more of a buy and hold investor and after the Reno cost these would be under water for rentals. Also it would require a very large private/hard money loan as I don't have a spare 200k laying around. If some is or knows a good resource to help out with this and guide us along the way I'd appreciate the referral as well, I'm happy to pay for someone on her behalf. Especially someone who is experienced with the emotional aspects of it all. Thanks, Kerri
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Real Estate Agent · Portland, OR · Member since 2013 · 85 posts · 37 votes
9y

Here is what I would do.  

1. Fix up the rental - back to rentable condition.  Hire a property manager to manage it.  Or sell the rental and lend the money out to a good reputable short term lending company and get 8-9% return with no headache.  

2. Sell the primary home, and buy a newer home nearby using a reverse mortgage.  A lot has changed with this product.  It is a great product that you should learn more about to help your grandma.  

Good luck!  And keep us posted in the outcome.  

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  • Residential Real Estate Broker · Beaverton, OR · Member since 2014 · 335 posts · 149 votes
    9y

    Hi @Ciarraghe G.,

    It sounds like your grandmother is pretty adamant about staying where she currently lives. If it's just the tax issue, you can let her know that she will not pay taxes on the first $250k of profit on the home where she lives. I suggest you talk to an accountant about her tax situation. As for the rental income, it may be wise to hire a property manager who will ensure that the tenants pay their rents and be able to her maintain the property to keep it in good shape. They will also be able to get her market value rental income for the neighborhood, which may offset the cost of bringing in a PM. This way she can move and still keep the rental for the monthly income.

  • Real Estate Agent · Portland, OR · Member since 2016 · 95 posts · 53 votes
    9y

    @Ciarraghe G. I helped a lady who was in a similar situation as your grandmother just a couple of months ago.... She had a duplex that was mismanaged and in need of a bunch of repairs. I am just finishing the rehab of the property. She had similar concerns in terms of taxes and income planning. 

    I sent you a colleague request, feel free to message me directly if you'd like to brainstorm.

    Bob

  • Dallas, TX · Member since 2017 · 77 posts · 28 votes
    9y
    Kerri Gee I'm still new at this but I agree with Randy Johnston. The first thing I would do is get that GOOD property manager in there to get that current tenant out. I am assuming she owns that rental free and clear so a manager is a small price to pay to ensure she gets that cash flow every month. I'm sure Randy has some good referrals for you:) good luck !
  • Real Estate Agent · Portland, OR · Member since 2013 · 85 posts · 37 votes
    9y

    Here is what I would do.  

    1. Fix up the rental - back to rentable condition.  Hire a property manager to manage it.  Or sell the rental and lend the money out to a good reputable short term lending company and get 8-9% return with no headache.  

    2. Sell the primary home, and buy a newer home nearby using a reverse mortgage.  A lot has changed with this product.  It is a great product that you should learn more about to help your grandma.  

    Good luck!  And keep us posted in the outcome.  

  • Auburn, CA · Member since 2016 · 26 posts · 9 votes
    9y

    I believe Randy Johnson hits it on the head, your grandmother is strong willed, but also needs a bit of help. She holding onto everything for fear of loss.  Definitely, a property manager would help this situation.    Best of luck

  • Portland, OR · Member since 2015 · 37 posts · 11 votes
    9y
    Thanks everyone for your advice, I will get in touch with you Randy by PM. I am a CPA so the taxes I can explain to her, she's just averse to the idea that she has to pay taxes at all, the fear of paying 40k for taxes on the sale of the rental is enough to keep her from having the ~ 160k remainder in her pocket or using that money to get her own home habitable. I am just looking for all of the options to help her feel like she gets a choice in her future. She is very stubborn and emotional but reality is that she is just simply incapable of taking care of her home, and cannot afford caretakers to help her, so I'm feeling she needs to downsize. She's currently on 5 acres with animals and a 2 story house, it's just too much for someone who is in her physical condition ( needs a cane, 2 fake knees, quite overweight). I appreciate your insights!
  • Real Estate Agent · Portland, OR · Member since 2016 · 95 posts · 53 votes
    9y

    @Ciarraghe G. be sure to consider an installment sale. She would be able to defer capital gains and earn interest income on ALL of her equity, potentially for life if she wanted to.

    Definitely worth considering for her rental property escpecially.

  • Portland, OR · Member since 2015 · 37 posts · 11 votes
    9y
    Bob Bochsler I've thought about that and think it's an awesome option for her, but haven't been able to find enough detailed information on it to get my arms around it, how do you prevent the new buyer from selling and therefore forcing you to take the whole remaining gain in the year they sell?
  • Real Estate Agent · Portland, OR · Member since 2016 · 95 posts · 53 votes
    9y

    @Ciarraghe G. Those are real concerns. However there are many options available to help protect her in this scenario. Much of it comes down to finding the right buyer since it is more of a partnership in that case.

    I'd be happy to meet for coffee or brainstorm over the phone if you'd like.

  • Real Estate Agent · Portland, OR · Member since 2016 · 95 posts · 53 votes
    9y

    @Ciarraghe G. Hi Kerri! I am curious how this all turned out for you and your grandmother. Any progress? Hope all is well!

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