patrick.net

*beep*

I have toyed with this idea, since I have connections back east (and in the deep south). I've been in touch with a local mortgage broker, and I still have a CU account back there. I'm pretty sure you can't get a standard 'owner occupied' mortgage, but you CAN get a mortgage at an 'investor' rate with a local entity. A little higher rate but not a problem to get if your financials are right.

Does that help at all?

I am still considering this given I can get a decent house in the town I am interested in for maybe $150k, and I could rent it out and break even easily, or more likely just have it as a 'pad' I can go to on holidays and for extended vacations with family and friends. But then I keep reminding myself it would sit empty 90% of the time and just be a cash flow suck. Sounds like it makes more sense for you, since you are trying to provide shelter for some family members.

E-man & pkowen thanks for replies.

I don't *own* a house here in California, IMO it's still crazy to own. Particularly where I live.

Anyhow, thus I am a mortgage virgin. I can sink the down payment into this that's not a problem, and pick up a 20-year to pay the rest. If you Zillow on Rome GA you'll see houses are quite cheap there I could *maybe* scare up cash for the whole deal. I mean a NEW house in a new subdivision I looked at briefly ran $120K-$150K, with some older houses running sub-$100K. But I'd prefer not to go all-cash on this it'd deplete my ability to play stocks etc.

These are just my opinions so take them with a grain of salt since this is a somewhat serious decision for you to make. But here goes nothin'.

First of all, have you been to Rome , GA? See- there's a HUGE difference between one region/state/city/town and another. I know this firsthand because I am from NC, moved to Boston, and later to the Bay Area. There are HUGE differences between all of these areas. The culture/weather/food/economy/geography/and countless other things will be drastically different, and especially if we're comparing somewhere like the Bay Area to some little town in GA.

I've visited prospective cities that I have thought about as a means to relocate to- mainly because they are cheaper and supposedly have jobs in my field. We went to Austin TX 2 years ago. It was a nice city but from talking to locals it gets into the 90's-100's and stays that way months on end. Also from experimenting on various job boards and talking to people in forums its almost impossible to get work. Plus its not cheap as most of the somewhat nicer, non-cookie-cutter areas are pricey and property taxes are high. I was hellbent on moving there 2 years ago. The idea was to move there and find a job, then buy a house. I'm glad I didn't do that because I'd probably still be looking for a job. Lastly, even though people say Austin is sort of like SF... it ain't. Not by a long shot.

Secondly, would your parents be able to take care of the place? If so, for how long? My Wife's Mom owned out of state real estate for a few decades. Since she had to take care of it that meant having to take 1-2 weeks off a year to go do maintenance. The house was never fully fixed up because there wasn't enough time. Management companies charged a fortune. It was a pain in the ass- truth be known.

Thirdly, what are the amenities in that area? Is there access to hospitals, grocery stores an other stuff? How easy would those things be for your parents to get to? Is the areas walkable? How about the traffic?

Lastly, have you talked to your parents about this? How do they feel about moving across country to an unfamiliar area just for a house? Have they been there? If not perhaps they need to take some extended vacations in case they find the area isn't right for them.

One more thing: Why that area in particular? Rome GA isn't all that far from Chattanooga, TN which in my opinion is a really nice small city with tons to do, nice museums, a big river that runs through town, plus it too is very affordable.

Oh I grew up in Rome. My brother still lives there, and would be able to assist with most physical aspects, checkout, maintenance etc. Before moving to California, I lived 20 years in Atlanta 70 miles away so no worries there. The point of Rome is my brother lives there, they used, to my sister is in Alpharetta, a niece is nearby. It's got more family than North Carolina, which was just where Dad was living when he retired. Big 3-story house on the golf course now unsuitable for their age.

This was my "bridge" idea to get them moved into a suitable place for their age ASAP. Dad is over 80 so I doubt most banks are going to want to loan them money and I don't want to DICK AROUND for a year trying to sell their place in North Carolina in order to free up their cash to get this move going. Frankly some health problems mean I don't want this to sit while they paint that 3-story behemoth on the golf course and try to market it.

I have some cash and good credit. I buy it, they move in. When the house in North Carolina is sold I pay off the mortgage ASAP and deed the Rome house to them. Seemed simple to me. Probably too simple.

So you plan on buying this house before their NC home sells? What would happen if the house doesn't sell or sells for drastically less than its valued at? Would you eventually have plans to move to Rome or is this simply a house for them? Sorry for the dumb questions.

Well you know that's a question of could I lose money. Sure I could. Frankly it's not so much about the money and if I gain some quality of life and care for them in exchange for monetary risk, that's fine. This was my idea to move things along quicker, you ever try to dig 2 parents out of a house? They have a dozen reasons to stall just a little longer, paint this, fix that fence, get good "curb appeal" so they maximize their sales value, all BS stuff that doesn't matter. One parent looked at houses in Rome and is OK with it. Frankly early signs of dementia of the other parent means it needs to be done NOW or not at all. The fear and anxiety only gets worse as dementia advances, and makes it more impossible to even think about changing anything in their life.

Well, in the end you probably know what's best. My parents aren't old enough to move out of their house yet. I've probably got another 20 years before that happens. But we went through this with my Grandad when we had to move him out of his house and into a retirement community. It was definitely not easy and this was without doing it from across country. My Grandmother is now pushing 90 and still in her house. But my folks like 3 miles away from her so that makes it a lot easier.

Bottom line is, I am quite confident you can get a loan with a local bank/CU/broker, it's just might not be the lowest low rate since you'll likely be in the 'investor' category. Of course rates and your loan amount are both so low, rate is not that big a big deal.

I'm familiar with Rome, GA. Nice college town, yes? B-52s and REM? I lived in Huntsville AL for many years and ran around Atlanta a good bit.

Best of luck!

pkowen says

I am quite confident you can get a loan with a local bank/CU/broker, it's just might not be the lowest low rate since you'll likely be in the 'investor' category.

Has anyone done something like this? Just want some personal experiences. I would think local banks would be leery of an out-of-stater but I dunno.

I have not, but I am considering buying property outside CA. Why not simply google up a local credit union, call them, and talk to a loan officer? As middlemen, they should be glad to help. They are eager to take your money when closing costs come due, after all.

Vicente says

I would think local banks would be leery of an out-of-stater but I dunno.

I'm not sure about that. After all, you grew up there, so you're not a complete outsider. If you're really concerned, you could become a customer of a local bank or credit union and develop a relationship with them ahead of time (although I don't know what your exact timeframe is).

The main thing is that this is a commercial relationship. It's possible some banks will be wary of outsiders, but it's also possible that they'd be happy to make a commercial relationships with someone who has roots in the area and wants to make a commitment to the area. They would likely charge you a higher rate for being non-owner-occupied, but as terriDeaner said -- no reason you can't chat with someone about this.

At the end of the day, if you have the three Cs, capability to pay, credit, and collateral, it's a commercial transaction in their book. Only the most insular of banks would be completely against it, and most banks should be able to articulate why they'd be against it, other than "you're not from around here, are you..."

How old are your parents?

Ptiemann is right. What would be your aversion to a national lender? I've done this type of thing several times with Wells. I've even bought a house from out of country using power of attorney. However even though it was an area I was very familiar with I did my looking live and in person.

With 15 year mortgages in the mid 3.5% range and plenty of very hungry banks why consider heloc's and fancy financing? The payments on 100k with a 15yr 3.5% would be about $700 a month with a total of $28,000 in interest for the life of the loan. Pay it off when the other house sells and you won't pay all that much interest to make playing games worth the hassle. Why do you care who services the loan?

Just don't go crazy and pull a Casey Serin..

He ended up buying around eight or so houses in different states.

Don't buy it if you cannot manage it or cannot find a management business to manage it for you.

What might be interesting would be if you can rent it out maybe half the year and live in it the other half..

Parents are 80. One with a ticking time bomb, the other with specter of dementia. So as previously stated, want to get them moved ASAP.

Aversion to a national lender? That's a personal opinion that Wells & BoA and banks like them are partly to blame for our current mess. When it all started I moved my money to a local credit union in protest. I'd just prefer to find a bank that MIGHT keep the loan on their books rather than fold, securitize, spindle, trade, mutilate, and resell it. This is probably naive and impossible but I thought I'd try.

Having recently lost my 88 yr. old mom, I know how stressful this must be. Sounds like you have relatives to help care for them which is good. Be prepared for the high costs associated with aging - - falls, possibility of nursing home care. I'm helping a friend out right now with his mother. She has advanced Alzheimer's and my friend is her only caretaker at home. It is incredibly stressful. I almost wonder if it would be worth looking into an assisted living place as opposed to buying a house...best of luck!

Rome, GA? Georgia is a different place from California for sure. I spent many a summer at Fort Gordon, GA. My favorite place for breakfast? The Waffle House outside of the main gate.

For those of you who are not from the south and have never heard of Waffle House:

http://www.youtube.com/watch?v=vRfLoyP73go

Have you considered what the tax consequences might be if you use the funds from the sale of your parents home in NC to pay off your mortgage (a gift from them to you) and then deed the house over to them (a gift from you to them)? Ultimately it is a wash to you and your parents, but somehow I don't think the federal government will see it that way.

@Vicente

>When it all started I moved my money to a local credit union in protest.

Great! I wish more people would do this!

I don't have much to offer, but thanks for bringing up a good topic. I'd like to buy in Arizona myself...

Vicente says

My brother still lives there, and would be able to assist with most physical aspects, checkout, maintenance etc.

You can probably ask your brother to look up a local lender. We are now working with a lender in Indiana to work out a deal, also moving from CA.

tjhspapa says

Have you considered what the tax consequences might be

Oh wow, no I had not. Ugh.

pkowen says

I'm familiar with Rome, GA. Nice college town, yes? B-52s and REM? I lived in Huntsville AL for many years and ran around Atlanta a good bit.

You're confusing Rome with Athens.

finehoe says

pkowen says

I'm familiar with Rome, GA. Nice college town, yes? B-52s and REM? I lived in Huntsville AL for many years and ran around Atlanta a good bit.

You're confusing Rome with Athens.

Ah, yes you are right, thanks. Now I recall it better - I have driven through (near) Rome. It was along my preferred route from Huntsville, AL to Atlanta, GA.

I'd look longer term. What happens when they can't take care of themselves? Can they qualify to stay in assisted living on Uncle Sam? The answer is 'no' if they have any assets.
So, my advice is to seek the advice of a lawyer or sharp accountant to make sure you don't make any mistakes.
Can your brother put a small addition on his house? Use the money from the sale of the parents current house?

I am actually in almost the same situation as OP Vicente. I'm in the process of buying a house (~$100k) for a parent in the mid-west (where I grew up) while I live on the coast. This is also my first house purchase.

One major hurdle was getting a loan. Despite our excellent credit and good incomes, NOBODY wanted to give us a loan, as it was for an "investment property". I talked to everybody. Big banks, small banks, my credit union. The few who did wanted at least 25% down (problem for us, as all our money is tied up, and I don't want to decimate my emergency fund). The closing costs are high, and the rates are pretty bad across all lenders for investment properties (~5%, 0 points). I found a place that would do it for 20% down, decent closing costs, sucky rate, but they are a faceless online-only direct lender.

The other thing is you REALLY need to consult a local (GA) real estate and/or tax attorney. There are a bunch of considerations you probably didn't even think of. For starters, you can only "gift" $13k/person/per year tax free... if your parents "gift" you a large sum, it will make them ineligible for Medicaid for 60 months. Are you charging them rent? Be prepared to pay taxes on that income. Gotta pay the capital gains tax too when you sell. This is just the beginning. Totally worth the small fee for the consult.

Despite the non-optimal conditions, I'm still going through with my transaction, as it's the only way to help out my parent. You can do it too, but make sure you get all the info before you proceed. Good luck!

Thanks JonnyDanger,

I'm glad Patrick linked this on main page, hard to connect with the few people who are in this sort of situation.

I will check out the tax angles, that is very concerning.

Last place we rented was in the "mother in law cottage" built in the backyard of another house. I wish I could do something like that, but the timing and costs and geography are against it.

@Rich, no my brother rents a small place, no help there.

Vicente says

Aversion to a national lender? That's a personal opinion that Wells & BoA and banks like them are partly to blame for our current mess. When it all started I moved my money to a local credit union in protest.

Yes, I no longer have any big bankster accounts either. While people might think BofA, for example, has a good ATM network because it's almost nationwide and that's what causes them to join, a good credit union gives you better services, lower loan rates, higher savings rates, and a better ATM network because you can often use credit union ATMs anywhere in addition to other ATMs that are part of the network.

Big banksters nickel and dime you on everything. I do most of my banking by internet now -- online bill pay, online payments, and online deposits, so I don't even need a local branch (I have one in-state credit union and one out-of-state). The telephone customer service I get from an out-of-state credit union is better than in-person service at a branch I used to get from BofA, and the telephone people are empowered to make more decisions on their own. I rarely write checks except on true person-to-person transactions.

It's win-win. You get your deposits out of corrupt institutions that are sucking taxpayers dry, and frankly destroying the world economy, and you get better service and more convenience.

Vicente says

I have some cash and good credit. I buy it, they move in. When the house in North Carolina is sold I pay off the mortgage ASAP and deed the Rome house to them. Seemed simple to me. Probably too simple.

If this is your plan, you need to design the transaction correctly. People have already mentioned gift tax issues, but what about estate tax issues? You mentioned at least one brother, and you may have a good relationship, but sometimes siblings fight over inheritance issues. If the transaction is designed correctly, you can make sure you sidestep any of those. If you do something that would constitute a loan from your parents, but you do it wrong, it could be characterized as a gift.

What you might be able to do is structure the transfer as a sale to them (as opposed to a gift as people are suggesting), but you have to be aware of any tax implications and legal implications from that and make sure you do it correctly.