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Richard, Lawyer
Category: Real Estate Law
Satisfied Customers: 55318
Experience:  32 years of experience as lawyer in Texas. I'm also a Real Estate developer.
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My mom is 92 and in great health. She tells me she wants

Customer Question

Hi my mom is 92 and in great health. She tells me she wants to move closer to my sister in stockton ca. She owns a home in salinas ca. All paid for. It would rent for 1600 per mo. It's worth 265000 to 300000. Its in good shape. Rent in stockton is 700. What is best rent it or sell it. Also she has everything in a living trust. Thanks tim. Her son
Submitted: 2 years ago.
Category: Real Estate Law
Expert:  Richard replied 2 years ago.
Hi! My name is ***** ***** I look forward to helping you!
You're actually better off to sell the property. Because it's been her personal residence, she would have no gain on the sale because she could exclude it under Section 121 of the Internal Revenue Code. Once property is converted to rental property, the improvements tend to deteriorate more quickly as renters simply don't care for property like owners. And, although you would get the $1600/month in rent, you would likely have costs of leasing it (typical broker fee would be 1 months rent), and the costs of the taxes, insurance, repairs, etc. In the end, you would likely end up with more money investing the sale proceeds than renting the property and you no longer have the risk of ownership.
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Customer: replied 2 years ago.
What investment would get anything close to 1600 per mo. Banks only about 350.a mo. She's 92 she can't risk the capital.
Expert:  Richard replied 2 years ago.
The thing is that you wouldn't likely be netting $1600/month because of the costs of the rental. And, presuming the house has some age on it, repairs are likely to be necessary, such as HVAC, roof, etc. that could eat up that monthly income. And, she's 92 years old. So, she could easily purchase an annuity at her age that would easily provide a monthly income of in excess of $4,000 for the remainder of her life no matter how long she lives.

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