Help keeping a family member in her home

[Ari Newman]

Hi,

I'm hoping someone can share some creative financing ideas to help keep a family member in her home.  She currently owns that home free & clear, and it's worth aprox. $200K.  Since it's a 2nd home that's used 4-5 months of the year, the taxes, insurance and maintenance are becoming a burden.  I'm entertaining the following scenarios:

1. Setup home for VBRO, AirBnb or other short term rental to help pay the expenses.  (She's not crazy about having stangers in the home)

2. She could get a HELOC and use the equity already in place to make these payments.

3. An arbitrage arrangement; she qualifies for a conventional cash-out Refi and then uses the proceeds to provide HML to my company. The difference between her conventional loan rate and my HML rate would easily cover her annual expenses.

4. Open to other creative ideas, thoughts, suggestions...

Ari

[Jeff Mauerman]

@Ari Newman, Of the scenarios are you outlined, the only one that puts your family member ahead is the short-term rental option. All of the others, which involve borrowing against the equity in the property, would cover the bills for a time but in the long term would put her further behind financially, barring potential appreciation of the property. My concern would be getting stuck in a perpetual cycle of borrowing against equity with no additional revenue.

I am no expert on short-term rental options, but I know there are certain protections in place for property owners when using the services - I know there are others in the forums who could chime in with better information.

I don’t know her whole scenario but some other thoughts - Would it make sense for her to reside in this property for more than six months of the year making it her primary residence? Would the taxes and fees on her main residence be less than this property if she were to switch?