skipro33
Thinks s/he gets paid by the post
Hello all, I'm actually asking for my brother. He is 57 years old, retired 2 years and realizes he has much more income than he needs. Both he and wife have very nice pensions, his around $5,000 a month, hers around $4,000 a month. She also gets SS based on an injury of around $2,000 a month. He just inherited around $100,000 and they stand to inherit another $100,000 to $200,000 in the next few years. They bought a 5th wheel and are wanting to do some traveling. First trip is this month through May as campground hosts at a lighthouse in Oregon. They have around $200,000 in the checking account and cash and figure they'll never need to touch their IRA's until health reasons mandate. They have around $600,000 in IRA's in a 60/40 split.
His neighbor approached him this week to tell him they are planning to sell their house and wanted to know if he was interested. He thought it might be a good way to invest the cash he has as well as the extra income that keeps stacking up in his checking account. He's never been a landlord and isn't interested in active management. He wants to hire out a property manager to collect rent as well as take care of all aspects of the rental. The property is worth around $420,000. It's a 3 bed, 2 bath home on a main street with a park across the street and sidewalks. This is within 30 minutes of Sacramento, CA and right now the whole bay area dot-com industry seems to have taken to the idea of working from home with many of them buying up the real estate in the California central valley, especially Sacramento at an alrarming rate. Just as it has in most other feeder towns to large metro areas like San Francisco.
He called me to ask what I thought of the idea. The only two things I could think of were to try to mitigate any agent fees by going through a lawyer or CPA and to study up on the eviction laws as they would pertain to him as a landlord. I also questioned having the rental next door if his intent was to be an uninvolved landlord, but he figures they will be traveling for months at a time with short trips home for the next few years.
If anyone can offer him some advice on how to proceed, educate up, or run-not walk away from being a first time landlord, I'd appreciate it. Heck, is it even the best way to manage this sort of funds and excess income for that matter? Personally, I'd simply continue to gather the cash and maybe consider buying a second vacation home or condo for the whole family to enjoy. I'd also consider using the cash to pay taxes on the tIRA and roll it into ROTH at this time. I think he will do that, but that still leaves a lot of cash just sitting there doing nothing as well as the excess income.
His neighbor approached him this week to tell him they are planning to sell their house and wanted to know if he was interested. He thought it might be a good way to invest the cash he has as well as the extra income that keeps stacking up in his checking account. He's never been a landlord and isn't interested in active management. He wants to hire out a property manager to collect rent as well as take care of all aspects of the rental. The property is worth around $420,000. It's a 3 bed, 2 bath home on a main street with a park across the street and sidewalks. This is within 30 minutes of Sacramento, CA and right now the whole bay area dot-com industry seems to have taken to the idea of working from home with many of them buying up the real estate in the California central valley, especially Sacramento at an alrarming rate. Just as it has in most other feeder towns to large metro areas like San Francisco.
He called me to ask what I thought of the idea. The only two things I could think of were to try to mitigate any agent fees by going through a lawyer or CPA and to study up on the eviction laws as they would pertain to him as a landlord. I also questioned having the rental next door if his intent was to be an uninvolved landlord, but he figures they will be traveling for months at a time with short trips home for the next few years.
If anyone can offer him some advice on how to proceed, educate up, or run-not walk away from being a first time landlord, I'd appreciate it. Heck, is it even the best way to manage this sort of funds and excess income for that matter? Personally, I'd simply continue to gather the cash and maybe consider buying a second vacation home or condo for the whole family to enjoy. I'd also consider using the cash to pay taxes on the tIRA and roll it into ROTH at this time. I think he will do that, but that still leaves a lot of cash just sitting there doing nothing as well as the excess income.
