My mom and I were discussing an option to help her retire, help me get into my first house and hopefully set up a good financial footing for both of us:
My mom bought a house in the Bay Area and wants to retire in the next 5-7 years. She’s had a ton of struggles in her life as a single mother and she is also the full time caretaker of one of my family members. As a result, she hasn’t taken the best care of the house (but it still has good bones).
I proposed that I do the following:
I Buy the house for what she bought it for, or at least slightly lower than market rate.
She continues to live there for 2 years while she pays rent to me. (Or, she doesn’t pay rent at all. – whatever we can collectively afford after running the numbers).
I pay the mortgage, and the money my partner was going to spend to spend on the mortgage for the 2 years gets diverted to pay for refurbishing and modernizing the house.
She moves to a LCOL area with the family member and my partner and I move into the house.
We stay in the house for around 5 years.
We sell the house for nice profit. (It’s already appreciated being in the Bay Area)
We split the profit with my mom. She gets most of the proceeds from the sale. This allows her to have a retirement cushion and me to build a financial foundation.
I think this plan makes some sense. I’m wondering from folks here: how can I make this plan successful? What should I do to ensure that this works out well. Any legal arrangements we can set up to make this work? Also, I am an avid DIYer with a design background and a passion for remodeling.
I am thankful for any advice you may have.
Edit: If one specific part of this plan doesn’t make sense, it is because I am naive to this subject which is why I’m asking for advice. If there are other financial products like a cash out refinance for example, please let me know. I don’t know what I don’t know. Thank you
Found this post also, but I might have to modify the plan based on our specific scenario: