Dear Ilyce: My in-laws have been renting for 10 years. Over that time, they’ve paid out $72,000 in rent. My father-in-law is getting ready to retire and will get a lump sum. He wants to invest it and live off the interest. We want him to buy a condo. What should he do?
Purchasing a condo might be a good idea. But let’s consider the economics. While owning an inexpensive condo might help your parent’s cash flow, renting might be even cheaper. I know that sounds crazy, but owning isn’t everything. Once your dad is retired, your parents may not earn enough income to make full use of the mortgage interest deduction or to even pay out the monthly assessments.
It does sound like your in-laws are ready for a change. Encourage them to talk to a financial planner the next time they come to town, to go over their money issues and figure out what move they should make next.