Cancer! Long term, short term, or sell it?

Question

Could you help with a really tough situation?  My best buddy has an amazing forest lodge in the woods on 6 acres just north of Seattle. 4/3 with 3000 sqft. He also has stage 4 cancer. Yeah, really. He and his wife have prepped it as an amazing wedding venue for future income, either with or without him. They are both 65 and vigorous. However, as his stamina wanes, weddings are becoming too work intensive. She’s inclined to sell and go traveling in his remaining years. He thinks he’ll live for many years, wants to keep the family home, provide for his wife long term, maybe do VRBO. But that still sounds like a lot of work. Long term rental is possible but it’s a one of a kind property and would need to rent for $5-6k per month (at least) to cover expenses. Does such a high-end rental market exist?

Maybe someone could make a fortune if they leased it from my friends and then ran it (a kind of arbitrage) as a short term rental/wedding venue?

Or maybe they refi and pull cash out for travel, and then what?

I’m sure there are other ideas but we’re looking for data-driven choices for this troubling situation.

Please help? What would you do?

Details-

Current Market Analysis- $1.85M sale price

Current Mortgage, 700k at 3.5% w 28yrs left

Current payments PITI $2400 mo

Long term rental projection- $5-7k per month?

Short term rental- $650-$1000 per night?

Wedding rental- around 10k per event includes lodging. Could escalate?

Can you help us help this couple with your creative advice? Thx a million!

Jay Hinrichs · Answer

sell it..  if he lived there 2 years as primary residence him and wife can take 500k TAX FREE  and maybe even if they lived there less time given the health situation.  take the money travel as they see fit.

Dave Skow · Answer

@Glen Holmen-  sell ....use proceeds to payoff  any debt....reinvest the  remainder .....this way they are simplifying  their lives / getting debt  free  /  investing  to  generate more income ....... things you  dont mention is  their  current other  income sources / their current other  assets ....consult  with their  financial  advisor  for  options  .....if they have  a primary with lots  of  equity - a reverse mortgage is  also  a source for  oncome ( if needed )

Jay Thomas · Answer

Hi Glen,

This is a tough situation. I would say maybe hiring a property manager? Having someone take care of the venue and such. It is just an idea. I do not know the true extent of the situation.

My personal opinion is to sell and use the money to buy a family home that is sustainable for his wife and then some.

Good luck though, and I would love to know what happens.

Eric Bilderback · Answer

Sell it all day long.  If I were him I would not be too concerned about maximizing tax benefits he should have well over a million dollars to travel and his wife should have a solid chunk left.  If he rents it out he is at the mercy of bad tenets and drama.  My advice would be to cut any potential negativity out and go enjoy every second he can.

Best of luck to and your friend,

Glen Holmen · Answer

UPDATE----

Thx to each who read and responded. Your kindness is lovely. My buddy has sold his house for full price (1.3M I think) and purchase another in cash (600k?) without any mortgage. The new property has a full AirBnB with a separate entrance on the ground floor. It is on a "vacation island" in Puget Sound and will rent easily and for plenty. So, his wife has income and cash flow as needed. He is on a different regimen now and doing pretty well. The fact that he can go fishing every day doesn't hurt at all either. Unless you're the fish......

thx again for your good will.

Theresa Harris · Answer

Hope and determination can be an amazing force with cancer.  I'd say if he wants to keep it, they should keep it. They can always hire someone to help and once he's gone, she can do what she wants with it.

Glen Holmen · Answer

I had forgotten that 1/2M is tax free. So helpful. Thank you so much.

Glen Holmen · Answer

Thx. That’s a great word. And compassionate. Very kind. I’ll pass it along.

Cancer! Long term, short term, or sell it?

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