This sounds stupid but lets try

House Hacking
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This sounds stupid but lets try

Jarred Marrow
Member since 2023 · 11 posts · 4 votes

Hello all, I am fairly new to bigger pockets online forums but I wanted to just throw some ideas that I have at you guys to see what you think. I am 27 and live in NY my parents are getting older and I am thinking of starting my REI portfolio, now the idea I have is to buy my parents house from them! The house is decent but I think I could turn it around into a really nice piece of property, both my parents are in there early 70s and I think it could be a gift to them that now I may be able to put money into their pockets and eventually mine. My idea is to do some construction and Re landscape the backyard, have the downstairs which we added bedrooms and a bathroom to upgraded, make some minor changes to the outside where we have a little mancave but my father put a bathroom in there as well and I was thinking to maybe make that a suite or its own mini apartment. Hoping can someone connect me with contractors, electricians, maybe architect personnel that i can also run my ideas by and see if it seems fit before I even propose this massive idea to my parents. Also if you guys can give me advice and tell me if this sounds like a terrible idea or could it work out!

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  • Robin SimonBusiness Member
    Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
    3y

    Doesn't sound like a stupid idea but you should probably find a local trusted CPA/Financial Advisor experienced in situations like this who can provide advice on how to best structure the sale/gift/gameplan

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  • Jacob St. MartinPro Member
    Investor · Charlottesville Virginia · Member since 2021 · 348 posts · 346 votes
    3y

    Hello Jarred, it is never stupid to explore your ideas! They will either be good ones or bad ones that you will learn from so that your next one is better. I have a couple of questions here and comments here. First, where will your parents live? Are they planning to move or downsize? Are you planning to continue to have them reside in the primary part of the property? Do you live with your parents? Do you plan to live somewhere on the property?

    Assuming that your parents will be staying where they are and occupying most of the property, it sounds like the only part that wouldn't be occupied is the potential mini apartment. I would get that fully set up as a mini apartment and operate it as a short term rental. 

    If your parents aren't going to be in the house anymore list the main house as a short term rental and either live in the mini apartment or have that as a second STR.

    One general piece of advice is that it sounds like you are thinking about the property like a home owner and not an investor. The first question you should be asking is, "How can this property generate income/the most income?" Then move on to "What renovations need to happen in order to tap into the income potential of this property?" With every renovation you do you want to have a specific purpose. For instance, in order to turn the man cave into a mini apartment you might need to add a small kitchen or add a closet to make something a legal bedroom. Or you might be adding an addition to add livable square footage and build a lot of equity. If you can't find a specific reason like this then you are probably making the decision with your heart not your head. For instance, unless you are trying to run a very high end luxury STR or the other homes in your area have high end landscaping, doing a huge landscaping job is probably not going to add much equity or increase your cashflow much.

    Another thought is that you don't necessarily need to buy the house from them to do this stuff. What if you just converted the man cave and listed it on airbnb and shared some of the profit with your parents. Or if you are set on buying it maybe see if they would do seller financing so that you can get better terms and don't have to go through a bank.

    I hope this is helpful! Feel free to reach out if you have other questions

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