Aunt stuck with second home - need help - Posted by Lynn

Posted by Ronald * Starr(in No CA) on April 09, 2003 at 17:08:35:


I don’t see any problem here. She simply sells the property, pays any income taxes on the sale, and the rest of the money is hers to do with as she wants.

That sounds like a very high mortgage payment to me, given the loan the amount. I suppose that is a PITI and perhaps also the HOA fees included, isn’t it? I’s suggest selling as fast as possible.

With that big of a monthly payment on it, it is not a good candidate for you to acquire and rent out, I would think. Since your aunt wants cash, you might go ahead and pay cash. Sure, you sin. But so what, you help out your aunt when you sin. Besides there is not such thing as sin. That is just a nonsense concept.

If you thought that the condo would rent for close to the monthly payment, and you expected good appreciation in the future, you might buy for no moneydown from your aunt. You would make monthly payments to her on a second loan that she would carry back to allow you to buy with no money down. She could apply those monthly payments as she likes, such as paying down on her home mortgage. The home mortgage would not be paid off instantly, but it would get paid down over time, and faster than if she did not make the extra payments.

You would get some tax benefits of owning the property. You might get some cash flow depending upon rental rate, however, from the numbers you mention it sounds like it will be a negative cash flow. You don’t mention the rental amount.

You don’t mention the interest rate on the existing loan, if it is over about 7%, it would probably not be a good idea to leave it on the property. In that case, you would make a downpayment and get a new loan at a better interest rate.

This might not be a very good investment, depending upon what else is available in the marketplace. It does not sound outstanding, given the information you have provided.

Good InvestingRon Starr**

Aunt stuck with second home - need help - Posted by Lynn

Posted by Lynn on April 09, 2003 at 16:33:39:

Hi all,

My aunt is in a situation and I’m hoping for ideas of how a newbie like me I might be able to help her out.

She has a vacant, fully furnished condo that is costing her 1k per month. Her first priority is to stop the bleeding; my uncle just died of cancer and she can’t afford to keep a second home with a school cafeteria worker income. She is hoping get her 30k of equity out of the home so she can use the money to pay off her primary home’s mortgage and thus be able to support herself without a house payment. The home is worth 130 to 135k. And she is willing to just give the VERY nice furniture (leather couches, etc.) away with the sale.

I do have money at my disposal if needed, but my understanding is using your own money is a mortal sin in creative real estate investment. The amount of money I make in this is a secondary concern to helping my aunt out and getting my feet wet in creative RE investment along the way.

Thanks in advance,