Making Your Parents Your Tenants

Physician's Money DigestAugust 2006
Volume 13
Issue 8

You're a physician who wants to investin real estate. Your parents are retired andare thinking of selling their home anddownsizing to something more affordable.Perhaps it would make financial sense tocombine these two objectives by buying ahouse and having your parents move in asyour tenants. According to, itmay be a wise financial move for your parentsto take the money they get from sellingtheir house, hand over a portion to youevery month for the rent, and invest a largechunk of the remaining money in an immediateannuity so they have a source ofincome. The amount of the down paymentyou put on the house should reflect howmuch you're willing to charge your parentsand still come out ahead financially. In thatsense, you may have to put down as muchas 40%. In addition, the tax implicationsfor your parents should be favorable.

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