Cashflow investment for retired and Fixed income?

[Cory Carlson]

Hello, 

I have an interesting situation that i would like some of your input on. I recently represented the sellers of a duplex that was in pre foreclosure. In 10 days i marketed the property, held an open house, found a cash buyer and closed. After paying off their judgements and debts they have about $100,000. This is ALL of their assets. Both Husband and Wife are on a fixed income from social security. Wife is on medicare and has a limitation to her assets. The fine print allows for real estate investments. We do meet with a financial advisor this week to help diversify and make this money last. They have very low credit, and were in pre foreclosure for several years. There is no way they would qualify for any conventional financing. 

My questions is do any portfolio lenders or creative means of financing look purely at the income and investment of the property and not the investors qualifications for smaller 2-4 unit properties? We are looking for a little passive income in a semi liquid investment in case a medical emergency comes about. I understand financing like this is usually associated with a larger down payment and higher interest rates. 

We live in Central Oregon and our market does not provide many opportunities within our time frame to find cash flowing properties of this size. Appreciation is less important to them, rather than the passive income and pay down on principle. Honestly, for their sake an investment somewhere out of the state with a hands off approach would be best. 

Let me know your thoughts. What would you do? 

Cory 

[Arlen Chou]

@Cory Carlson the strategy does not make sense... Your clients were in pre-foreclosure on a duplex, they have bad credit, no active income and all they have is $100,000.  Not sure about their age or their health situation, but based on their finances and their needs you should not be putting them into another 2-4 unit property, even if it some cheap property that cash flows $100 a month per door.  If they could not handle the duplex they were in, I don't see how they could handle another property, especially out of state. They are not going to have any mind share from the turnkey guy or the PM. 1 bad tenant, a bad renovation, a bad roof and they lose their nest egg and their little bit of cash flow. If they are in the twilight years of their life, you should be steering them toward conservative paths, not something totally outside of their wheelhouse. I don't mean to be overly harsh. This is just an opinion and you know what they say about those... good luck to you and your clients.