Purchase of retirement unit

[Desto]

This question is no behalf of a friend.

She owns one third of the house that her parents live in. Her parents are thinking of selling the house and using the money to purchase a retirement unit for themselves.

It is likely that since the current house is not in a desireable location in terms of current buyer demand, it will not fetch much more than what is necessary to pay for the retirement unit.

The question is, do such retirement unit appreciate in value? If so, how can we estimate the future return on the unit that her parents are thinking of buying?

Is there anything that we need to be aware of when it comes to investing in a retirement unit?

This is all very new to my friend and I so we need to become very savvy about retirement units before my friend agrees to hand over her portion ( naturally, she'd retain the right of one third of the title of the unit if that is possible).

Advice much appreciated.

Desto.

 

[Bobq]

Desto,

No advice, but some questions to ask yourself (or the parents of your friend).

Is the retirement unit in a desirable location? Is it likely in future to be a throving area where retirees would move to, thereby supporting demand?

Is it likely to be the parents home until they pass on, or are they likely to sell again to move to a nursing home etc?

Are there restrictions on selling the unit, or other interests tobear in mind?

If your friend owns the third of the house outright (ie no debt) can she finance the parents out of their share, or is she being asked to fund the unit? Does she want to do this? Can't the parents fund 1/3 of the cost of a unit?

What other inventive solutions can you come up with - think flexibly and try to get outside the square!

One thought - (this assumes the parents own two-thirds of the house). They sell their share to your friend and borrow one third of the unit price. Your friend rents out the old home and agrees to meet the interest payments on the retirement unit, in exchange for a 1/3 interest in the unit. If there are more fmaily members involved it gets trickier, of course.

Hope some of this helps.

Bob

 

[Desto]

Thanks, Bob, you have provided good starting points for my friend to investigate and consider.

Desto.