Closing Today on a "Reverse Kiddie Condo"

[Brian McMurry]

A "kiddie condo" is the concept of buying a residential property with "owner occupied" rate financing made possible by having an adult child living in it, if only while they're in college or single. I'm planning to do that for each of my two sons when they move out and go to school. 

Today however, I'm closing on a 2BR/2BA condo in a 55+ active living community which my mother is downsizing into. She's going to move from out of state to my locale, enabling me to more easily help her and allowing her to spend more time with her grandchildren. She'll pay me market rate rent, thus keeping that money in the family, and the condo will eventually transition into a more traditional rental property that will support my retirement and that my children will one day inherit. This is a home run in my book.

I've been trying for more than a year to buy an investment property in my area and couldn't find one for which the numbers made sense. House hacking wasn't an option for me and those higher investment property interest rates didn't help either. However, buying with owner occupied rates and having a trusted and reliable tenant move in immediately made all the difference.

On day one, I'll have $300/mo cash flow and 6.5% CoC rate of return. Anecdotally, I've already got $5k in equity before signing the papers based on a comparable property's current list price. Nothing to go crazy about but it feels like a "win" for three generations of my family in this difficult market.

All the best!
Brian