Advice on Property in CT After Retirement

[Nathan Barilka]

Hi all,

My name is Nate, I'm a first time poster here on the Bigger Pockets forums. I have a question in regards to my mothers house in CT, and how she could potentially turn the property into something that could work for her in retirement. Her plan was to sell the house, take the money and buy another property outright somewhere in the Midwest (closer to family), and have the remaining funds to do with as she pleases after she retires. It sounds great, however after hearing story after story on the BP podcasts and reading on this forum of how properties can work for you, I think there's probably a better route to take. The house is worth roughly $650K, of which she holds about $150K mortgage. I discussed with her taking the equity in her current house to purchase a new one, then have tenants move in pay the mortgage on the CT house. For her, the idea of being "free and clear" of any debts or mortgage payments in retirement is an attractive one to her.

There are creative individuals on this forum, so I thought I'd throw this out there and see if anyone might have another idea how this house could work for her, while still giving her financial freedom in retirement. 

Thanks in advance, looking forward to meeting people here on the forums!

Nate

[Andrew Briggs]

Hi, I lived and worked in CT growing up for over 20 years.  It's a pretty place to live, however I don't feel that the state's economy is poised to grow that much when compared to other states.  For one, the cost of living is very high.  Also, it seems more jobs are leaving vs. coming into the state.  The one exception here is if her property is located on the "gold coast".  This is the area close enough to New York City (i.e., Stamford, Danbury, Fairfield) where people will live in these CT towns but commute for work to NYC.  In my opinion, these towns will always retain their value and be in high demand.  If her property is elsewhere in CT, I would cash out and invest in property closer to wherever she's moving to...  Why?  Here are some more reasons: 1.  Tenant-landlord rights and laws.  I know MA. has laws in place that heavily favor the tenant at the expense of the landlord.  I don't know about the laws in CT. but it may be safe to assume they are similar to MA.  I currently live in TX. where the laws seem to better empower the landlord to handle evictions and other tenant issues as they arise.  This is a BIG deal and shouldn't be overlooked.  2.  Your mom's property is at a high price point, i.e., $650k.  How much are you expecting to charge in rent, 10%?  There's a much greater portion of the population able to pay $1-2k/month in rent vs. $4-6k/month.  If it were me, I would be more interested in a greater % cash flow relative to the property's value.  In TX, it's completely reasonable to get 10% of the property's value in rent.  In many parts of the Midwest, I'm assuming the same holds true. 3. Property Management.  I prefer to live close to my property.  Keeping the house in CT. while moving to another part of the country would necessitate a property manager.  It would also mean that you couldn't easily check up on the property.  Ultimately, I would recommend cashing out of the CT. home and putting the equity into one or multiple, high quality rentals in the town in which she is moving.  I hope this proves helpful.  Andy