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Buying a house, but not using til tenant dies

  • 06-12-2020 11:05pm
    #1
    [Deleted User]
    Posts: 14,344 ✭✭✭✭


    Hi folks,

    I'm Irish, live in Ireland. An older couple (early 70s) I know recently sold their house (for about 150k) and bought an apartment in Spain to live out their days. Spent about 80k buying.

    I am early 30s. I was looking at what they did (move to spain) and I'd like to think it's a good idea and something I would consider myself.

    So it popped into my head, I wonder how would it go down if I were to approach them and offer them say half the market value for their apartment, but although I'd own it, I'd only get the use of it when they die.

    So in other words, I'd get a cheap apartment that I could retire to, and they get an extra 40k or so in their pockets to spend on themselves. Seems win-win to me.

    They have kids, but theres about 8 of them, so an even split of the apartment in the will (which I reckon is the plan) would force the sale of the apartment for a fairly smallish lump sum per child.

    Wondering has anyone ever been down this road or considered similar before?

    Cheers folks.


Comments

  • #2
    PirateShampoo
    Registered Users, Registered Users 2 Posts: 4,406 ✭✭✭PirateShampoo


    What happens if they live to 100 or change thier mind in 10yrs and want to sell for full market value.


  • #3
    [Deleted User]
    Posts: 14,344 ✭✭✭✭ [Deleted User]


    PirateShampoo wrote: »
    What happens if they live to 100 or change thier mind in 10yrs and want to sell for full market value.

    If they live to 100 that's tough luck for me, but they couldn't sell it again as theyd no longer be the owners.


  • #4
    MrMusician18
    Registered Users, Registered Users 2 Posts: 7,706 ✭✭✭MrMusician18


    Deleted User wrote: »
    If they live to 100 that's tough luck for me, but they couldn't sell it again as theyd no longer be the owners.
    Such agreements aren't unheard of. I think the oldest woman in France had one and she outlived the buyer!

    There was one on Daft in Drumcondra recently that was subject to an agreement like you suggest.


  • #5
    Smee_Again
    Registered Users, Registered Users 2 Posts: 2,148 ✭✭✭Smee_Again


    Check out the agreement Jeanne Calment made with an investor who bought her home in return for a stipend until she died.

    Jeanne lived to 122 and outlived and the investor who’s widow had to continue paying the monthly stipend.


  • #6
    Eric Cartman
    Registered Users, Registered Users 2 Posts: 26,280 ✭✭✭✭Eric Cartman


    yeah, 70 isn't what it used to be, unless he's already had a heart attack or 2 and she's beaten cancer or is a diabetic etc.. theres a high chance you won't be seeing that apartment for 20 something years.


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  • #7
    Mrs OBumble
    Registered Users, Registered Users 2 Posts: 26,203 ✭✭✭✭Mrs OBumble


    Who pays maintenance, insurance, property tax, management fees etc.

    I guess its you. With no income from the property.

    What if their kids don't like your standard of maintenance and sue you for harming their parents?

    What do you do they start playing loud music at 3am cos they can't sleep. Or a grandkid moves in and bases a drug dealing business there - you can't exactly evict them.


  • #8
    Car99
    Registered Users, Registered Users 2 Posts: 2,530 ✭✭✭Car99


    [Deleted User] wrote: »
    Hi folks,

    I'm Irish, live in Ireland. An older couple (early 70s) I know recently sold their house (for about 150k) and bought an apartment in Spain to live out their days. Spent about 80k buying.

    I am early 30s. I was looking at what they did (move to spain) and I'd like to think it's a good idea and something I would consider myself.

    So it popped into my head, I wonder how would it go down if I were to approach them and offer them say half the market value for their apartment, but although I'd own it, I'd only get the use of it when they die.

    So in other words, I'd get a cheap apartment that I could retire to, and they get an extra 40k or so in their pockets to spend on themselves. Seems win-win to me.

    They have kids, but theres about 8 of them, so an even split of the apartment in the will (which I reckon is the plan) would force the sale of the apartment for a fairly smallish lump sum per child.

    Wondering has anyone ever been down this road or considered similar before?

    Cheers folks.

    If you bought a similar place at full market value and rented it out for 10 years without using it yourself at all you would probably be better off financially and have an asset you can sell at anytime you choose.


  • #9
    elperello
    Registered Users, Registered Users 2 Posts: 15,821 ✭✭✭✭elperello


    Sorry, I wouldn't advise any old person or young person to touch your idea with a bargepole.

    Too many unknown unknowns.

    Buy what you can afford and enjoy it.


  • #10
    LineConsole
    Closed Accounts Posts: 84 ✭✭LineConsole


    I think you should leave the elderly couple in peace and stop scheming. They don’t need people circling them like vultures.

    I’m sure they have plans for their estate after they’re gone and I doubt it involves giving you half the property for free.


  • #11
    [Deleted User]
    Posts: 14,344 ✭✭✭✭ [Deleted User]


    LineConsole wrote: »
    I think you should leave the elderly couple in peace and stop scheming. They don’t need people circling them like vultures.

    I’m sure they have plans for their estate after they’re gone and I doubt it involves giving you half the property for free.

    Stop scheming? :p I'm not Dick Dastardly trying to con them out if their life savings. I'd be offering them 40k and they would have no material difference to how they plan to live their lives out.


    To the other posters above, I'm 33. If the live to 100 that would be okay with me. I work in ireland so wouldn't be able to live in Spain even if I wanted to, right now. This evening would be my retirement plan, much like it was theirs.

    The gist of my idea is that they would be responsible for fees, maintenance etc as they would normally be. And I'd taken over when they pass away. I dunno how realistic this is, hence asking on here.

    The idea above it just buying an apartment outright and renting it for 30 years is the best alternative idea, but im not sure if it's too much headache for little return?

    Youd have to buy it outright so more cost upfront. Youd have to pay management fees, and also hire a management letting company of some to sort out tenants. Plus you have the question mark over the type of tenants. Whereas I know personally the older couple and I know they take care of where they live.

    Buying and renting seems like an ongoing and involved process. Whereas this would he more a case of throwing a few euro to them, signing a contract and forgetting about it for the next 20-30 years.


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  • #12
    ted1
    Registered Users, Registered Users 2 Posts: 23,794 ✭✭✭✭ted1


    LineConsole wrote: »
    I think you should leave the elderly couple in peace and stop scheming. They don’t need people circling them like vultures.

    I’m sure they have plans for their estate after they’re gone and I doubt it involves giving you half the property for free.


    This happens in many places. Sounds like you are more of support of their young circling the old. The op is not circling them like a vulture, he is suggesting a mutual beneficial plan, where the elderly couple have more cash in to enjoy themselves.

    https://www.latimes.com/business/realestate/hot-property/la-fi-hp-death-do-us-part-deals-20170114-story.html


  • #13
    Mrs OBumble
    Registered Users, Registered Users 2 Posts: 26,203 ✭✭✭✭Mrs OBumble


    [Deleted User] wrote: »
    The gist of my idea is that they would be responsible for fees, maintenance etc as they would normally be. And I'd taken over when they pass away. I dunno how realistic this is, hence asking on here.

    They cannot insure what they don't own.

    Also - you need legal advice from Spain if you are to even consider this. You have no way of knowing what issues local laws there ie where they live, might throw up.


  • #14
    brisan
    Registered Users, Registered Users 2 Posts: 2,242 ✭✭✭brisan


    Deleted User wrote: »
    Stop scheming? :p I'm not Dick Dastardly trying to con them out if their life savings. I'd be offering them 40k and they would have no material difference to how they plan to live their lives out.


    To the other posters above, I'm 33. If the live to 100 that would be okay with me. I work in ireland so wouldn't be able to live in Spain even if I wanted to, right now. This evening would be my retirement plan, much like it was theirs.

    The gist of my idea is that they would be responsible for fees, maintenance etc as they would normally be. And I'd taken over when they pass away. I dunno how realistic this is, hence asking on here.

    The idea above it just buying an apartment outright and renting it for 30 years is the best alternative idea, but im not sure if it's too much headache for little return?

    Youd have to buy it outright so more cost upfront. Youd have to pay management fees, and also hire a management letting company of some to sort out tenants. Plus you have the question mark over the type of tenants. Whereas I know personally the older couple and I know they take care of where they live.

    Buying and renting seems like an ongoing and involved process. Whereas this would he more a case of throwing a few euro to them, signing a contract and forgetting about it for the next 20-30 years.
    How do you know they need the 40k
    They could be quite comfortable financially
    2 pensions will go a lot further in Spain than it will here
    Plus they have 70k less costs from the sale of their house plus any savings they had


  • #15
    [Deleted User]
    Posts: 14,344 ✭✭✭✭ [Deleted User]


    brisan wrote: »
    How do you know they need the 40k
    They could be quite comfortable financially
    2 pensions will go a lot further in Spain than it will here
    Plus they have 70k less costs from the sale of their house plus any savings they had

    They should be living fairly comfortably. They have, as you say, money from the house sale, two pensions, and a lower cost of living.

    They're not broke or looking between the sofa cushions for a few euro to go to the shop.

    They could well laugh me out of the room at the mere suggestion of this. But to me it seems like a mutually beneficial agreement. It's also something that, if they were interested, I'd let their own children have the opportunity to buy it before I do, to avoid any family conflict incase the kids would want to do this.

    The insurance aspect, local laws etc are things I'd need to find out more about. I cant imagine local laws being an issue at all though. Not sure what laws or regulations there could be that would prevent someone selling an apartment they privately own.


  • #16
    [Deleted User]
    Posts: 18,749 ✭✭✭✭ [Deleted User]


    I'm not sure why you don't buy an apartment and rent it out. When you retire it's there for you?
    Why buy off these particular people?
    It's very strange


  • #17
    riffmongous
    Moderators, Society & Culture Moderators Posts: 12,822 Mod ✭✭✭✭riffmongous


    Previous thread on it here

    https://www.boards.ie/vbulletin/showthread.php?p=113646428


  • #18
    irelandrover
    Registered Users, Registered Users 2 Posts: 3,827 ✭✭✭irelandrover


    Deleted User wrote: »
    They should be living fairly comfortably. They have, as you say, money from the house sale, two pensions, and a lower cost of living.

    They're not broke or looking between the sofa cushions for a few euro to go to the shop.

    They could well laugh me out of the room at the mere suggestion of this. But to me it seems like a mutually beneficial agreement. It's also something that, if they were interested, I'd let their own children have the opportunity to buy it before I do, to avoid any family conflict incase the kids would want to do this.

    If they aren't stuck for money then what is in it for them?

    You said you expect then to pay maintenance and fees. So really, they sell you an asset that is worth 80K for 40K and still have all the ongoing costs.


  • #19
    [Deleted User]
    Posts: 14,344 ✭✭✭✭ [Deleted User]


    bubblypop wrote: »
    I'm not sure why you don't buy an apartment and rent it out. When you retire it's there for you?
    Why buy off these particular people?
    It's very strange

    Bigger upfront costs, ongoing involvement with tenancies, management agency, etc.

    In what way do you think it's strange? It seems, to me, to be win-win.


  • #20
    [Deleted User]
    Posts: 14,344 ✭✭✭✭ [Deleted User]


    irelandrover wrote: »
    If they aren't stuck for money then what is in it for them?

    You said you expect then to pay maintenance and fees. So really, they sell you an asset that is worth 80K for 40K and still have all the ongoing costs.


    Well that's for them to decide. At 70 they've still got, presumably 15-20 years to live. If they have, for argument sake, 70k in the bank + 2 pensions. Adding 40k to their worth could mean they could buy another apartment there and rent it out, or buy something small back in ireland (you could get an apartment here for about 100k I'd say) or they could blow it on elaborate holidays or yada yada.

    Itd be entirely up to them. As I've posted above, they could laugh the idea out of the room, which would be fine. But that's for them to decide.

    I wanted to post it here and make a thread to get some advice on whether anyones done it, or are there obviously flaws, etc. As there would be no point in saying it to them, and both sides agreeing its a great idea, only to find out afterward that it cant be done, if you see what I mean?


  • #21
    o1s1n
    Registered Users, Registered Users 2 Posts: 35,443 ✭✭✭✭o1s1n
    Master of the Universe


    I know personally if someone tried swooping in on my elderly parents to do a deal with them that would see them ultimately getting their properly for half the market value, I'd think it was a scam or at very least they were being taken advantage of.

    This might also cause issues for them in their family re inheritance. Technically the amount you'd be 'saving' would be coming directly out of the 8 children's inheritance. Even if it's not ultimately a lot of money, don't underestimate how nasty these things can get. Bit of an extreme example, but three people just died in Ireland due to an inheritance arguement.

    In simpler terms, stay clear! :) There are far less troublesome ways of investing your cash.


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  • #22
    brisan
    Registered Users, Registered Users 2 Posts: 2,242 ✭✭✭brisan


    Deleted User wrote: »
    Bigger upfront costs, ongoing involvement with tenancies, management agency, etc.

    In what way do you think it's strange? It seems, to me, to be win-win.
    What if the value of the property plummets in Spain as what happened during the last recession
    Spain has been one of the hardest hit countries both in economic terms and fatalities
    I can see a lot of holiday homes in Spain being sold both by nationals and non nationals alike

    Will you be looking for some of your money back if the property is only worth 40k this time next year


  • #23
    irelandrover
    Registered Users, Registered Users 2 Posts: 3,827 ✭✭✭irelandrover


    Deleted User wrote: »
    Well that's for them to decide. At 70 they've still got, presumably 15-20 years to live. If they have, for argument sake, 70k in the bank + 2 pensions. Adding 40k to their worth could mean they could buy another apartment there and rent it out, or buy something small back in ireland (you could get an apartment here for about 100k I'd say) or they could blow it on elaborate holidays or yada yada.

    Itd be entirely up to them. As I've posted above, they could laugh the idea out of the room, which would be fine. But that's for them to decide.

    I wanted to post it here and make a thread to get some advice on whether anyones done it, or are there obviously flaws, etc. As there would be no point in saying it to them, and both sides agreeing its a great idea, only to find out afterward that it cant be done, if you see what I mean?

    I was honestly just trying to see what you thought was in it for them because i don't see an upside. The only upside I could see was if you were responsible for maintenance.

    From your point of view do you think that it would be a good idea to make them responsible for maintenance? I'd assume they would do the cheapest thing possible.


  • #24
    VanHalen
    Registered Users Posts: 95 ✭✭VanHalen


    You could buy the property from them and at the same time "sell" them what's called a "life interest" - in other words the property is in your name but Land Registry would record that there is a life interest on it which means you would not be able to sell it. So you buy the property and "sell" them a life interest so you end up paying the net amount? (Not sure if that's allowed - may be seen as tax evasion). It could be that you would have to pay the full amount and that they pay for the life interest simultaneously meaning you would pay stamp duty on the full amount and they would pay CGT on the full amount. I'm guessing they would have to pay CGT as the house is no longer their PPR as they are now living in Spain.


  • #25
    BrokenArrows
    Registered Users, Registered Users 2 Posts: 7,498 ✭✭✭BrokenArrows


    It's a reasonably common practice. But in reality too much hassle for a 80k place.

    Just take your 40k and invest it. Likely come out with more than 40k profit after 15 years.


  • #26
    The J Stands for Jay
    Registered Users, Registered Users 2 Posts: 5,841 ✭✭✭The J Stands for Jay


    Mrs OBumble wrote: »
    They cannot insure what they don't own.

    Also - you need legal advice from Spain if you are to even consider this. You have no way of knowing what issues local laws there ie where they live, might throw up.

    There would likely be tax issues. Would you owe Irish or Spanish tax on the below market cost purchase? Would they owe Irish or Spanish tax on rent free accommodation?


  • #27
    SteM
    Registered Users, Registered Users 2 Posts: 6,964 ✭✭✭SteM


    The parents will probably ask the kids what they think and you'll never get 8 kids to agree on the same course of action so I'd say this is never going to happen tbh.


  • #28
    seamus
    Registered Users, Registered Users 2 Posts: 68,317 ✭✭✭✭seamus


    I'm not as cynical as many of the others here, but I still think it's a bit contrived.

    To make this workable would mean that you'd need to make sure you've covered a lot of bases. If they're living in property they only half-own, but paying no rent, there may be tax implications for them in the absence of any special arrangements. If they need to move back home, if they need to go into residential care, if they need to have modifications made, your existence complicates things.

    What if they die and their estate turns to you looking for €40k that you can't raise?

    This would be a messy enough arrangement between family. You're effectively a randomer to them. The €40k wouldn't be enough I'd say, any solicitor would tell them this is storing up a world of mess when they die.

    Most likely they want a nice sunny retirement place where family can come visit them, which can then be passed on as a holiday villa for their children when they die.

    You're assuming they'd need or want €40k. They could have gold-plated pension throwing €50k a year at them and nothing to spend it on.

    I see what you're trying to do, but if you had €40k hanging around, you'd be better off putting it into a long-long investment fund to then withdraw and use to buy a retirement property when you retire.


  • #29
    KaneToad
    Registered Users, Registered Users 2 Posts: 3,459 ✭✭✭KaneToad


    BrokenArrows wrote: »
    It's a reasonably common practice. But in reality too much hassle for a 80k place.

    Just take your 40k and invest it. Likely come out with more than 40k profit after 15 years.

    Really? Where would one go about getting such a return in 15 yrs ?


  • #30
    partyguinness
    Registered Users, Registered Users 2 Posts: 8,203 ✭✭✭partyguinness


    It's like those Equity Release schemes.

    Let's say you are both retred and 70. Mortgage free houes worth say, €200k. Basically a lender company will give you €100k hard cash which will be registered against your property but no repayments. When the last person dies the estate will be left to sell the house and repay the debt.


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  • #31
    DonalHoran
    Registered Users Posts: 7 ✭DonalHoran


    Buying a property in Spain at a discount & taking possession wshen sellers pass on.
    This is an established practice in France whereby property owners over 70 sell on their property at a substantial discount - purchaser buys at a large discount but also pays a modest monthly amount to sellers. Once occupants pass on,the property reverts to original purchase - Google for details /property listing - the process is called Vigeor ??? or something that sounds similiar !!!


  • #32
    [Deleted User]
    Posts: 14,344 ✭✭✭✭ [Deleted User]


    DonalHoran wrote: »
    Buying a property in Spain at a discount & taking possession wshen sellers pass on.
    This is an established practice in France whereby property owners over 70 sell on their property at a substantial discount - purchaser buys at a large discount but also pays a modest monthly amount to sellers. Once occupants pass on,the property reverts to original purchase - Google for details /property listing - the process is called Vigeor ??? or something that sounds similiar !!!


    What's the idea behind paying money to the sellers? Surely being quids-in with no actual difference to your life is the benefit for them?

    I dont think I'd view it as such a decent deal (as a buyer) if i had a monthly bill aswell. Unless the property was being sold at a VERY low price in the first place. You could risk paying more than its worth.


  • #33
    brisan
    Registered Users, Registered Users 2 Posts: 2,242 ✭✭✭brisan


    Deleted User wrote: »
    What's the idea behind paying money to the sellers? Surely being quids-in with no actual difference to your life is the benefit for them?

    I dont think I'd view it as such a decent deal (as a buyer) if i had a monthly bill aswell. Unless the property was being sold at a VERY low price in the first place. You could risk paying more than its worth.

    They could also die a week later
    That's the gamble


  • #34
    The J Stands for Jay
    Registered Users, Registered Users 2 Posts: 5,841 ✭✭✭The J Stands for Jay


    KaneToad wrote: »
    Really? Where would one go about getting such a return in 15 yrs ?

    4.73% per annum shouldn't be too hard to achieve.


  • #35
    [Deleted User]
    Posts: 14,344 ✭✭✭✭ [Deleted User]


    McGaggs wrote: »
    4.73% per annum shouldn't be too hard to achieve.


    I'd go that route if it were possible, however, I reckon that's an unrealistically high %, or would likely come at the risk of losing my money altogether..?



    brisan wrote: »
    They could also die a week later
    That's the gamble


    Yeah, i understand that, but surely just making a single one-off payment for the property makes more sense? I presume, in a situation where the buyer is also willing to give monthly payments, the property is not a normal property, but an incredibly sought-after place.


    (or, as I speculated above, the price paid for the property, is much smaller than 50% of the market value).




    This thread is very interesting.


    To look at the other alternative, which is obviously buying an apartment and renting it out, does that then make you liable for local Spanish taxes, etc. (seems a much more complicated version of things, albeit possibly perceived as more 'normal' an approach to take).


  • #36
    DonalHoran
    Registered Users Posts: 7 ✭DonalHoran


    VIAGER is the actual title of this type of property scheme in France - it's a well establised procedure whereby older people will enter into a legal agreement to sell their property at a significant discount ( plus they receive an agreed monthly payment )to a purchaser wishing to secure a long term investment in France & in return they stay in ther property for life & receive an agreed monthly sum.
    Like everything there are positive & negatives involved for both parties & I suggest that a person entering into such an arrangement does quite a bit of research in advance/takes legal advice - the sellers are able to release equity in their property & receive an agreed monthly sum.The purchaser receives title to the property & full ownership at a futire date. As to whether such a scheme exists in Spain ,would have to be investigated/researched. Could ,I imagine, work very well in certain circumstances - not for everyone but an exciting option for some.If the property owners lived to a very ripe old age,your 'investment' could turn negative /on the other hand if they passed on within a relatively short period ,the ruturn on your investment could be substantial.

    Best of luck should you decide to proceed.


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