Need advice to prepare for my parents' retirement

[Andy Tran]

Since English is not my first language, please excuse for any grammars. My parents are 55 years old. I am helping them to prepare for retirement so they can have extra income. I have an idea to create passive income, not sure if it makes sense to do it. The plan is to do cash-out refinance on their current home to take out equity to buy a rental property.

My parents house is about 80k remaining until they pay off the mortgage. As I've been doing some homework, most of lenders will do 75% LTV (Loan to Value)

My parents' house is estimated around 200k in the market. Cash-out refinance, the bank will give us 75%

$150,000 - $80,000 (still owe) = $70,000 (take this money out to put toward down payment of the new house for rental income)

Let me know if it is the right thing to do.

Phu