What would you do if you had.....

...800k to borrow, with $160k in the bank, plus 3 rentals worth $1.4m with $1.2m loan. And you need to buy your parents house at $400k with no rental income, but also want to keep developing?

Develop first and delay parents place? Buy Parents place then wait? Look to increase wealth by doing subdivision and selling before buying parents place? So many options.

What would your strategy look like, it may be completely different from mine.

Dave

 

Depends on income. If my wages were high enough and secure I'd do the lot.

 

Don't know why you "need" to buy your parents place, but as it will produce no rental income, if you have the choice of buying it later, that would be the best option.

 

Lend your parents 20% deposit so they can get their property.

Or

Buy the property and rent it to them at full market value and gift them some money every now and then.

How much do you need to develop?

 

If getting the parents place is not absolutely essential now, then I would keep developing to build wealth and increase my net worth, strengthen my financial position and get them a place later on. You'll also have more options then depending on the wealth you've created.

 

Can only borrow 800k so can't do it all unfortunately, if I bought parents place first this would reduce loan capacity to around $450 taking some pretend rental income into consideration. $450 plus $110 (-50 for deposit) won't go very far for the next development.

Servicing is what's holding us back. That and lack of cold hard cash

 

I had a cash injection from them to help fund our development triplex, the reward was that we buy them a house.

 

They can't borrow, they have no income and are 65 years old.

We don't really know how we need yet as we don't know what to do next.

 

I also want to make sure I can adequately repay parents loan. Not putting anyone at risk.

They've also waited for 2 years while we develop, I feel guilty asking them to wait a lot longer, 6 months would be fine.

 

Easier said than done. Parents could wait about 6 months if necessary.

 

They could borrow:
Strategy: Incorporating Parents into Property Planning Strategy: Incorporating Parents into Property Planning

 

Sorry, I read it as that you had to buy your parents' place for some strange reason, not that you had to buy a property for your parents.
That's a different story then.

 

Very interesting. However I quote "5. Help them get jobs! So they can then qualify for finance."

If they don't have an income how can they service a loan?

 

Can your parents live in one of the houses you develop? Kill two birds with one stone.

 

Possibly, this option can only happen if we could afford to buy and build. Not sure if that's possible. Also I don't think we afford the loan repayments.

I'd prefer to have cash to bolster my position.

 

O

Or rather than saying I'd prefer cash, what I should say is I'm worried about funding their loan without an adequate cash supply or cash income.

My salary is good but relying on my income is a risky position.

 

Have you already built the triplex for which they lended you the money?

 

You could lend to them.
This could be an interest free loan, or a nil payment till the end loan, or a market rate loan with you gifting them money to repay the loan.

It all depends on the circumstances.

 

They gifted the deposit. Yes triplex is complete but not in an area they would live.

 

Please give me an example, remember have $160 cash. No other cash reserves and no equity available.