My parents own a beach ‘shack’ which they inherited. They recently moved to a new home at the same beach and have no requirement for the shack anymore. They have a deep sentimental attachment to the house and want their three children (myself included) to take over the property. None of us are able to contribute cash for the property but we would consider financing it if we were able to rent it out as 2 holiday units (some reno’s required) during periods of high demand (ie schoold holidays etc). I am currently researching the market and it looks very good. Our aim is to be able to keep the property at no cost to us, any profit would be reinvested in the property. I was wondering what experiences anyone has had with holiday letting and possible pitfalls. Also what measures could we take to protect the asset in the event of divorce. And thirdly would vendor financing work in this situation, I think Mum and Dad would be happy to receive interest only considering that we would eventually inherit the principal. They are receiving a part pension so I assume interest would be treated as income but I don’t know if centrelink would treat the property as their asset as long as they hold the title. Sorry for the long winded question but I would really appreciate some help with this. It is a very emotional issue for our family and I want to give Mum & Dad the confidence that we can make it a win win for everyone.
You need to check this with a solicitor, but I think if your parents vendor finance, they don’t own the property, you do.What they will own is the mortgage, and therefore the income. A wrap would leave it in their name. The divorce thing is a whole other story, and that outcome would have to be provided for in the purchase contract. Some hard thinking ahead for you all.
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