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It's a 2,500 sq ft two story house which has not been maintained throughout the years. It has mold issues in two of original bedrooms, has shower pans leaks, carpets, drapes, flooring, painting inside and out, oven, stove, repairs in 3 bathrooms, needs tenting for termites, new garage door to name the few etc.
Meeting with Property management company and real estate agent late/July and will have a general contractor give us an estimate of how much we need to repair in order to rent. Phew....
I had the exact same situation. Down to the mold, roof, termite tenting, replacing the HvaC, tearing out bathrooms and kitchen and rats living in the basement. The cost was almost $120K but it was necessary.
I was just going to offer the repairs listed were going to be well over 50K. Back in 1995, I took on a similar remodel, and there was always something behind the wall or in the attic. Never again. Ask your Realtor for another price, the quick as-is cash sale. Get more estimates and multiply by 1.5 to 2 times the amount given. If it's to be a rental, you could be making the repair over and over, unless you really get to the bottom of the problem, not always as simple as it sounds.
Not knowing the neighborhood, it's hard to say. If you do the repairs, you could take on a home improvement construction loan for the remodel. This would use the equity (and future equity) and the rent can pay back the loan. The true question is if you had to sell could you recover any investment?
The true question is if you had to sell could you recover any investment?
Which brings up the question: is your mother ever coming home? If not, maybe you should just sell the house now. Tax-wise and headache-wise, that may be your best option.
Which brings up the question: is your mother ever coming home? If not, maybe you should just sell the house now. Tax-wise and headache-wise, that may be your best option.
No, mom would not be coming home because she is declining, she is 89 with dementia.
Then the question becomes what is the point of doing all that work on the house ? Who is going to be the one taking off work to meet with contractors, checking on what they are doing, etc. OP- unless you are retired, live nearby and are not working, doing a remodel, etc. on your mom's home is just a giant PITA.
What's the point ? To me, selling the house " as is" and just unloading it is the better option. Easier to get the money out of it a.s.a.p and get the funds invested. Doing a repair/remodel, then renting it and hoping tenants don't wreck your newly fixed house is going to be difficult and time consuming.
It depends on the market. My mother's house was in the hot real estate SF Bay area. I could have sold it "as - is" for about $900K. I spent $120K and sold it for $1.3M. I then took the proceeds and used $400K & bought 3 rent houses in Texas (each 1700-2000 sq ft) in the Trust name and each provided about $1700/mo rent income. I invested/saved the balance of my $1.1M (after fees & taxes on the house) to use for Mom's ongoing expenses. When she died, each of the 3 Trust beneficiaries inherited a rental property.
There are lots of creative things to do. But repairing the house is worth it in many cases.
No, mom would not be coming home because she is declining, she is 89 with dementia.
In that case, it may be well worth looking at all options including selling as is and also fixing it and selling it. The money from selling it could be used to pay for mom's care or invested to produce income if more is not needed for her care.
Firstly, let me say to the OP that I am very sorry that mom is no longer able to be cared for at home. Having dealt with similar situation with parents and in-laws I know you will be facing some very stressful days even if most things are pre-arranged.
As others have said, this is really a situation that needs a balance between:
the "fiduciary" goal of PROCTECTING assets of the estate
potential "strategic" plan for eventual sale of mom's home / settlement of taxes / distribution of assets
"emotional" aspects associated with mom's former home and possessions.
As someone that has seen such things get very "complicated" I would recommend that the OP, who does have some of the pieces in place, schedule a WHOLE FAMILY session with qualified elder care / estate planning attorney(s). At such meeting(s) it is important that ALL the potential beneficiaries are aware of mom's financial needs, as well as things like the sequence of events if there is already a trust or will on file. It is sometimes helpful if everyone gets a heads up well in advance so that there can be a "question and answer" session where a PROFESSIONAL can lay out the pros & cons of each potential option that may be available. I also have experience as a LANDLORD and believe me, even in the BEST CIRCUMSTANCES with an outstanding property managment company and well-qualified tenant the odds of 'recouping' $50k worth of repairs are exceedingly challenging in even the HOTTEST rental markets. It is almost certainly more prudent to plan to sell the home as-is or perhaps just addressing the most "frightening" areas of deferred maintenance.
It is generally MUCH EASIER to do this well before mom passes as waiting until afterward shifts the emotions from one of "caring" for her while she is still in memory care to one of "loss" and finality that may make even the most conservative / agreeable siblings react differently...
Your mother is. But since you hold Power of Attorney, you get to act on behalf of your mother--hopefully after consulting with your siblings on the matter...but the call is yours if you hold POA.
But does it really need $50K worth of repairs? That sounds a bit much. You need to spend your mother's money wisely and not go overboard. You will not see a return on many "upgrades" that you may be considering. What do you think your mother would have done?
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First, for all that said it "comes from the estate", there is no "estate". Your Mom is still alive.
You have POA. Your Mom, through you as POA, pays.
But don't do it. You don't want to be spending a ton of money just to be in the rental business with four siblings. That is a recipe for a squabble with no end.
Two options:
Sell the house and put the money in Mom's bank account.
Or, get a couple of appraisals, and sell the house to the family members who wish to be in the rental business. They can dump their own $50 Grand into the house and live happily ever after...if they haven't killed each other first.
Don't get involved in a rental situation with a family asset.
First, for all that said it "comes from the estate", there is no "estate". Your Mom is still alive.
You have POA. Your Mom, through you as POA, pays.
But don't do it. You don't want to be spending a ton of money just to be in the rental business with four siblings. That is a recipe for a squabble with no end.
Two options:
Sell the house and put the money in Mom's bank account.
Or, get a couple of appraisals, and sell the house to the family members who wish to be in the rental business. They can dump their own $50 Grand into the house and live happily ever after...if they haven't killed each other first.
Don't get involved in a rental situation with a family asset.
THIS^^^^^
You are in for a world of trouble getting into the rental business with money your siblings are already claiming a stake in.
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