Client Success Story | Setting up His Parent’s Retirement

A client of mine was looking for a way to help his parents retire.  He's the only child and as the only child understood his job was to help set up mom and dad to make things easier for them as they got older. Now married himself and looking to expand his own family he wanted to make sure his parents now in their 60s had a secure retirement.

His parents were living in a three bedroom home, and no longer needed the extra space.  After discussing with them, they decided to use the equity from their home to purchase a multifamily property. Their plan was to sell their home and use the proceeds to purchase a multifamily property where they can live in a back house and collect rent from the other units on the property to supplement their retirement.

The process itself was similar to a 1031 exchange except that since they lived on the property it was not a 1031 exchange which. A 1031 exchange must be done on investment property. As a couple they were exempt on paying capital gains taxes up to 500k for the sale of their home.

It took a few swings from them on some properties, but the perfect triplex became available for them. This triplex’s structure and layout was the most appealing to his parents. The property was on a large lot with two driveways- one on either side of the property. It consisted of a duplex in front and small house in the rear. Once the triplex was purchase they were able to renovate the back house to be suitable and private for his parents and even planted a small garden next to the back house to replace the garden that they had at their previous home.

They are now enjoying a remodeled home and have two tenants paying down their mortgage and providing retirement income. As rents continue to raise they will have more income over time as their mortgage is fixed and their property’s rental income grows annually.