Financial advice for seniors?
December 3, 2015 7:17 AM Subscribe
Who do I contact for specific financial advice for seniors?
My father is 70, owns his primary residence outright and owns two rental properties, one outright and one with a smallish mortgage (85K). He has no cash savings. He's retired, his income consists of his social security and rent all adding up to about 55K a year. He also has credit card debt of about 30K.
These properties are all located in northern NJ, in an area with a high cost of living and high property taxes. Property taxes and insurance equal about 30K a year. The houses are all older and none of them are in great shape.
This situation is not sustainable. I manage his bills and I've managed to keep everything afloat by some really creative juggling but it's getting more challenging. I want to sell his primary residence and move him into one of his rental units. He is open to this but getting the house cleared up to sell is going to take a while as my mom, who passed in 2013, was a hoarder with a serious home shopping addiction and the house is packed. He is going to need an influx of cash in order to get the house in sellable condition.
He inherited all of these properties so he has never bought or sold a house. I have rented my entire life so I have no experience in this either. He would be open to getting some kind of loan to pay off debt and buy us some breathing room before we sold his house but I don't know what kind of loan that would be. I don't even know what kind of professional to consult here, I feel like I'm failing at adulting at 40.
To sum up:
a) What kind of financial person do we consult about these issues (bonus for knowing a ballpark of what we can expect to pay), and
b) If anyone has been in a similar situation, I would deeply appreciate hearing about your own experiences.
My father is 70, owns his primary residence outright and owns two rental properties, one outright and one with a smallish mortgage (85K). He has no cash savings. He's retired, his income consists of his social security and rent all adding up to about 55K a year. He also has credit card debt of about 30K.
These properties are all located in northern NJ, in an area with a high cost of living and high property taxes. Property taxes and insurance equal about 30K a year. The houses are all older and none of them are in great shape.
This situation is not sustainable. I manage his bills and I've managed to keep everything afloat by some really creative juggling but it's getting more challenging. I want to sell his primary residence and move him into one of his rental units. He is open to this but getting the house cleared up to sell is going to take a while as my mom, who passed in 2013, was a hoarder with a serious home shopping addiction and the house is packed. He is going to need an influx of cash in order to get the house in sellable condition.
He inherited all of these properties so he has never bought or sold a house. I have rented my entire life so I have no experience in this either. He would be open to getting some kind of loan to pay off debt and buy us some breathing room before we sold his house but I don't know what kind of loan that would be. I don't even know what kind of professional to consult here, I feel like I'm failing at adulting at 40.
To sum up:
a) What kind of financial person do we consult about these issues (bonus for knowing a ballpark of what we can expect to pay), and
b) If anyone has been in a similar situation, I would deeply appreciate hearing about your own experiences.
I don't know about the financial planning professional, but if it were my situation, I'd contact some real estate agents first to see what the house is worth and how much time you might need to sell it. Then you'll also have a better idea of how much worth your father really has before consulting the financial person. It might be better to sell his primary residence as soon as possible and pay off the debt that way instead of taking on another debt (a loan, that you mentioned).
posted by DMelanogaster at 7:31 AM on December 3, 2015
posted by DMelanogaster at 7:31 AM on December 3, 2015
Based upon what you've described, I'd seriously think about selling all three properties and getting your Dad into a comfortable, easy to maintain rental apartment in an over 62 community.
Here's why:
1. Does he have any interest in actually maintaining these properties? Does he enjoy being a handyman, or is everything reported by a tenant handed off to someone you have to pay?
2. What are the pending issues with the properties? Will any of them need a new roof, plumbing, furnace, etc?
3. Rental properties are taxed at a different rate than primary residences and this situation may be costing your dad, instead of providing an income for him.
I'd get to an estate planning attorney first, so that she can help you and your dad make a plan that makes sense for how he wants to live his life now.
Then I'd get a home inspector and an appraiser in to evaluate and value each of the properties. The inspection will clue you into any potential big-ticket repair items that may be in the near future. The appraisal will tell you what the properties are worth, and provide a cost basis for any capital gains, again, this is attorney territory, so follow the advice you get from the professional.
Then I might also get in touch with an Estate Sale company. These places regularly come into one's home and liquidate all the crap in it. Some will be dumped straight out (hello old newspapers and magazines) some will be donated, the rest will be sold, either in whole lots to a thrift store, or at a large sale. Is this the way to get the most money for your shit? Of course not, but it's the most expeditious way to get it out of your life.
Were I your Dad, I might want to be safely moved into my little apartment, with only my most treasured items before preparing the houses for sale. Or before putting them all on the market as-is. If you list three properties with one Real Estate person that person will be incented to lower his/her commission to secure the deal.
You'll need a good accountant for the year after the properties are sold, after that, put the proceeds in the bank, and have your Dad live off of his Social Security, pensions, 401(k), and the interest off of the principal.
Now he's debt free, shit free and property-management free. He can make friends, enjoy his family and when something breaks, he can call a guy who will come fix it.
That's what I call peace.
posted by Ruthless Bunny at 7:49 AM on December 3, 2015 [7 favorites]
Here's why:
1. Does he have any interest in actually maintaining these properties? Does he enjoy being a handyman, or is everything reported by a tenant handed off to someone you have to pay?
2. What are the pending issues with the properties? Will any of them need a new roof, plumbing, furnace, etc?
3. Rental properties are taxed at a different rate than primary residences and this situation may be costing your dad, instead of providing an income for him.
I'd get to an estate planning attorney first, so that she can help you and your dad make a plan that makes sense for how he wants to live his life now.
Then I'd get a home inspector and an appraiser in to evaluate and value each of the properties. The inspection will clue you into any potential big-ticket repair items that may be in the near future. The appraisal will tell you what the properties are worth, and provide a cost basis for any capital gains, again, this is attorney territory, so follow the advice you get from the professional.
Then I might also get in touch with an Estate Sale company. These places regularly come into one's home and liquidate all the crap in it. Some will be dumped straight out (hello old newspapers and magazines) some will be donated, the rest will be sold, either in whole lots to a thrift store, or at a large sale. Is this the way to get the most money for your shit? Of course not, but it's the most expeditious way to get it out of your life.
Were I your Dad, I might want to be safely moved into my little apartment, with only my most treasured items before preparing the houses for sale. Or before putting them all on the market as-is. If you list three properties with one Real Estate person that person will be incented to lower his/her commission to secure the deal.
You'll need a good accountant for the year after the properties are sold, after that, put the proceeds in the bank, and have your Dad live off of his Social Security, pensions, 401(k), and the interest off of the principal.
Now he's debt free, shit free and property-management free. He can make friends, enjoy his family and when something breaks, he can call a guy who will come fix it.
That's what I call peace.
posted by Ruthless Bunny at 7:49 AM on December 3, 2015 [7 favorites]
I'd get to an estate planning attorney first, so that she can help you and your dad make a plan that makes sense for how he wants to live his life now.
This is what a financial planner does, not an estate planning attorney. An estate planning attorney will write your Dad's will and related papers for after he's gone, not what you're asking about here.
Then I'd get a home inspector and an appraiser ... again, this is attorney territory
No attorney is needed for inspection and appraisal of the houses. An accountant can advise you on how much you'll realize from the house(s), real estate taxes, capital gains taxes, etc.
So, get a financial planner. I can get you a referral if you MeMail me.
Some accountants may also be a good fit for financial planning.
posted by JimN2TAW at 2:41 PM on December 3, 2015 [1 favorite]
This is what a financial planner does, not an estate planning attorney. An estate planning attorney will write your Dad's will and related papers for after he's gone, not what you're asking about here.
Then I'd get a home inspector and an appraiser ... again, this is attorney territory
No attorney is needed for inspection and appraisal of the houses. An accountant can advise you on how much you'll realize from the house(s), real estate taxes, capital gains taxes, etc.
So, get a financial planner. I can get you a referral if you MeMail me.
Some accountants may also be a good fit for financial planning.
posted by JimN2TAW at 2:41 PM on December 3, 2015 [1 favorite]
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posted by Mr.Know-it-some at 7:27 AM on December 3, 2015