Posted by Philip on March 13, 2004 at 07:51:42:
Thanks Tony.
We will have to get down to “what”, before we can address “how”.
Philip
Retired parents and expert ideas(long) - Posted by Philip
Posted by Philip on March 12, 2004 at 15:42:55:
Let me put a situation in context and see what you all think. My retired parents are 66 and 64 years old. They have been retired several years and travel much of the year. They own 40 acres, where their little used home sets; and another house with 5 acres, 1 mile away. On one front acre of their 40 acres I have a home on 1 acre.
They invest with me a little on the few mobile home Lonnie deals I have done.
They need further investments that are not 3% Cds.
They are trying to figure out what is the best thing to do with their home and land. They will sell, but don?t know when they should.
Will rising interest rates, which are sure to come, reduce the number of buyers a year from now?
Will it affect the type of buyer they want? Namely, someone with 30k + equity in an existing home?
They would sell their property whole, partial, develop a few site built homes?whatever.
They are just kicking ideas around and will take action soon if deemed necessary due to the market,?.or sit and wait if that is better.
Their home and 40 acres is worth about 140k in this low cost of living part of Missouri. The property is free and clear and well maintained 10 minutes from town.
The other 5 acres has an older home that is in foreclosure (parents are the bank) and there are different possibilities there as well. They have thought of separating the house off, and selling it to carry the note. The house is worth about 40k.
After separating the house they have thought of drilling another well and putting in a small metal building and a pad to park their 2 RV?s. They have considered land/home packages (maybe 2) with doublewide mobiles.
Should they take the fact that credit will tighten into their factoring?
Or will they not be affected if willing to carry the note?
They do need investments, but not 20 years in length?.
I would help them with any developing and be a partner in some things, and just helping with others?.if they chose that route. I do NOT want to do anything but suggest ideas to them?it is their property and their money and they earned every penny of it!
I will post this on the main board also.
Thanks,
Philip
Re: Retired parents and expert ideas(long) - Posted by Tim
Posted by Tim on March 13, 2004 at 08:11:25:
I don’t know what their tax situation is, but keep in mind that the sale of a personal residence can be tax free. The basic rule is up to $500,000 of profit on a home that you have lived in for 2 of the last 5 years is tax free for a married couple. You should check with an accountant, but I think if you split the property up you lose the tax advantage on part of it. One option would be to sell their current home/land & move into the foreclosed home. Use the foreclosed home for storage & a mailing address while they travel for 2 years & get another tax exemption at the time of sale. I don’t know if any of this applies, or would even be worth the hassle of moving twice.
I am in a similar situation with my Mom, helping her to make financial decisions now that my Dad is gone. One thing I have learned over the last 2 years is that things can get real complicated real fast, & a good tax professional can save a lot more money than their services cost.
Re: Retired parents and expert ideas(long) - Posted by Tony-VA/NC
Posted by Tony-VA/NC on March 12, 2004 at 15:57:19:
Philip,
The first question that needs to be answered is what are your parents trying to accomplish?
A true and defined answered will present a list of solutions for you. Guessing or assuming will not likely be of much use to your or them.
I don’t know about your folks but many parents find it difficult to accept suggestions from their children. Let’s face it, they have seen us do some pretty stupid stuff over the years.
Your parents will probably need to come their own conclusion so the suggestions may need to be quite subtle and limited in numbers. Again, a reason why you truly need to know what they are trying to accomplish.
Tony
Some things they agree on - Posted by Philip
Posted by Philip on March 12, 2004 at 18:03:37:
They both agree(with each other!) that they want to travel for now.
They agree that they will have to move closer to town and have a “low upkeep” home in 10-15 years.
They agree that they want their money put to better use than it currently is.
They actually do not mind my input on financial matters, but I certainly don’t pretend to tell, or even advise…unless they ask. Which is another matter.
It seems to bother them to start such a conversation, but once started they have many questions for me and express gratitude for my thoughts.
I think it must be hard for them to ask…after years of being asked.
They are still very knowledgeable and more wise than ever.
They are prone to think “outside the box”, but not dangerously so.
Thanks for focusing my “novella”.
I have actually said the same thing to them in moments of frustration…“what do you want to do?”…because they don’t agree with one another on soooo many things!
I guess that never ends: )
I love my folks very much.
Philip
Re: Some things they agree on - Posted by Tony-VA/NC
Posted by Tony-VA/NC on March 13, 2004 at 07:48:03:
They want to travel and live near closer to town. Those are general “to-do’s” and a good start but it does not address the investment goals directly.
As for travel, that would require your assistance or a manager to handle rental or payment collection. Development deals are cash and time intensive. You may not be on the site everyday (bad weather etc.) but the deals can drag on and on unless you are there to manage the progress. This would also put a dent into travel.
Selling off the lots might work if you helped in collection while they sat on a beach somewhere.
The point is to simply take the invesment objectives (cash, cashf flow and how long) and begin to analyze them from the perspective of the lifestyle they wish to lead. I assure you, the answer will surface.
Tony