Helping Parents Through Retirement in Denver

[Quoc Tran]

Hello BiggerPockets!

My parents have worked hard throughout their lives to put their kids through school and pay down the mortgageby the end of this year they will have finally paid off the house and are hoping to retire May 2018.

Here's the problem. They do not have 401k/IRA accounts, so they would depend fullyon social security income. And I know, I know, you're probably frowning on them for not having a retirement savings account, but they were notfinancially educated or hadRich Dad Poor Dad in their lives. Investments were never their thing and I'm afraid to say they were stuck in the Rat Race all their lives. Although the house will be paid off, they are afraid social security income will not be enough to cover for other expenses, such as car payment, utilities, property taxes, insurance, and hopefully a little vacationing so they can enjoy retirement.

So I'm trying to help them, and here's my plan. Their current house is not in bad shape and is in an up and coming neighborhood in a decent school district. A coat of paint here, drywall there, laminate flooring throughout and the house will be a perfect rental. We live in a suburb of Denver, and the rental market is pretty hot. I was thinking they can refinance the house, and use the cash for rehab and a down-payment on a decent multifamily. Since it's just the two of them and they don’t need much space, they can house-hack the multi-family and rent out their current home as well. I believe this would give them a pretty good monthly cash flow. My goal is to analyze deals to get them an extra $1000 per month.

What do you all think of this plan? Are there better alternatives?

Thank you very much,

Quoc

[Matt M.]

You are right. That is a tough job. Could she take on employees and just manage? Just an idea if she has a good book of business. 

I just checked my heloc at Elevations. It's at 5% right now. They will lend up to 90% of their "computerized" value. That value was close, if not high compared to what I thought my home was worth. No appraisal, I can't remember any costs, and we closed in 2 weeks. 

If they pulled $300k out, they could pickup 2-3 condos that would rent from $1k-$1500 a month. Just be wary of the complexes with high HOAs.