Father/Son REI Strategy

Buying & Selling Real Estate
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Father/Son REI Strategy

Ryan Leake
Property Manager · Austin, TX · Member since 2021 · 88 posts · 72 votes

Hi there - thanks in advance for taking the time to consider my situation!

The situation:

My dad is 75 years old and looking to retire in the next year. Currently, he is an apartment renter in Marin County, CA. He likes his place, but doesn't love it and would be open to relocating around the area. He has $100,000-$150,000 in the bank that is ready to be invested, rather than get eaten up by inflation. Granted he has been conservative with his money and rarely invested it up to this point - I am trying my best to inform him on the value of investing in real estate. I have ran several different investing strategies by him and we've narrowed it down to two possibilities - house hack a 2-3 unit property in San Rafael, Novato, or Petaluma or buy one or two SFR in a hybrid market out-of-state that will likely have positive cash-flow and decent appreciation overtime. It's also important to note that he qualifies for VA financing.

On top of that, I am also actively educating myself and storing capital for my first real estate investment. I feel as if I have accumulated enough knowledge to make either strategy mentioned above work, and I hope to deploy some of my own capital to begin my investing journey. An additional consideration is that I hold a CA real estate license. That said, by adding my own capital, my hesitations are overcomplicating my dad's first real estate investment and adding any possible risk towards our positive relationship.

The questions:

1) Given the situation, do you see one strategy or the other (house-hack or out-of-state) as a clear favorite?

2) Is it wiser to combine our capital to invest in a property together or seek out REI opportunities independently from my dad?

Appreciate any & all insights provided! If there is other information that I can provide to paint a fuller picture then please let me know in the comments. Thanks!

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  • Esta Ryder
    Member since 2023 · 101 posts · 67 votes
    3y

    I think that it is great that you are looking out for your dad.  My initial thought is does your dad really want this or do you want this for him because you see the potential and he wants to support you?  If he has been relatively conservative with his investments over the last decades, he may not want to do what you are suggesting but may feel bad telling you.  I could be completely wrong- just throwing this out there.  One idea might be that you buy a duplex in an area that he would like to live in with your capital and then he rents from you.  It keeps things simple and guarantees that you will have  atleast one good renter for your first investment property :)


    As far as combining your money, I would not- only because I have siblings and I don't want to complicate things or make things ugly when my parent would die.  I'm sure you have seen this happen since you hold a real estate license.  It just wouldn't be worth the risk to me.  However, if I were an only child then I would do it.  Again, just my opinion

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  • Ryan Leake
    OP
    Property Manager · Austin, TX · Member since 2021 · 88 posts · 72 votes
    3y

    @Esta Ryder

    I really appreciate your perspective here. You bring up an interesting point of whether it's me or him that really wants to make this happen. Most of me believes that we both do but I might be having a hard time seeing my own bias. What I do know is that he is ready for change and expressed interest in moving further north of his current location, towards an area like Petaluma - which has solid momentum as a real estate market. 

    Having him as a renter would work if I could single-handedly afford a duplex in the area however, at least from a traditional lender's perspective, I am not yet able to qualify for unless my dad co-signs - which I see ask a greater risk as I learn more through this process. Especially given that I am one of four of his sons.

    The other options we're looking at is investing his $ into a out of state market and continuing to rent wherever he pleases. I could invest in my own opportunities out of state separately. 

    Thanks again for your insight!

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  • Caroline Gerardo
    Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
    3y

    Given your father's age he cannot earn back or wait through a mistake. Is he accustomed to living in connected space (not single family)? Buying a duplex with his VA is where I would start. I would like to see him stay close -less than 17 miles from where he now resides to keep his friends. He should buy VA with no down by himself. You can help with moving, any rehab needed and finding a tenant who has perfect credit and is compatible with Dad.

    Do I think any market has "solid momentum" right now, nope. 

    Rohnert Park and Cloverdale also places to look. Get all siblings on board. 

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  • Ryan Leake
    OP
    Property Manager · Austin, TX · Member since 2021 · 88 posts · 72 votes
    3y

    @Caroline Gerardo

    Thanks for sharing your thoughts! He is currently in a high density apartment and grew up in a little farm house with 6 siblings so living in shared spaces doesn't seem to bother him. 

    In terms of staying close to his friends... I don't say this with judgment or gloom but he really doesn't have many in his current city. In fact, his closest friend in the area actually lives up in Petaluma where he's looking at property's. 

    Really like the idea to get all siblings on board and will start a group conversation around this decision. Thanks for the tip!

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