Best investment strategy? Advice needed

Hi there,

I have a situation and would love some suggestions/advice. I

My mum is sitting on $200K lazy equity in her home (primary place of residence, worth $250K). So far, she has no plans to invest further. She is 56, nearing retirement and has no retirement strategy. She has no interest in learning about property investing  – not because she's lazy, but because she feels overwhelmed and feels as though she is too old for all "that stuff". She is on her own on a very low income (less than $35K).

I'm in my late 20's, have just purchased my second investment property (one canberra, one sydney) and am slowly trying to teach mum the value of property investment. Her house is about 40 years old and in need of a renovation. It's far too big for her by herself and she's indicated she would prefer a newer, smaller place. She lives in a country town, greater rental return but wouldn't be the best captial growth.

I think there is huge value for both mum, and myself, to get this equity working for us. She doesn't have much cash flow to be purchasing a place in a captial city. There are a couple of scenarios I am considering putting to her: 
1. Purchase 2 investment properties using the $200K equity – one in mum's name, one in my name. In return for say $50 – 100K of her equity, I pay out the remainder of her existing mortgage ($50K left), freeing up her cash flow for her to pay her second mortgage.  She stays in her existing home, rents out her investment property
2. Purchase 2 investment properties and take a loan to renovate her existing home. she rents out her renovated home (potential for much more rent) and purchases her place of residence, a smaller place. I still pay her existing mortgage plus anything else I need to to ensure mum comes out on top.
3. Should she purchase a place in a regional area etc with higher rental returns due to her cash flow situation? Or should we puchase something together – she provides the equity in her place, I pay the mortage on the investment plus her own mortgage?

While it's my priority to help mum for her future, I'd also like a win-win situation for both of us – I help her and she helps me (by way of equity to get another place). Whatever strategy we choose, if any, it would need to be relavtively low risk as obviously a fear of her's I can imagine would be losing her existing home. I know if we don't do something together, her equity will continue sitting there and she won't do anything at all.

Either way, I know she gets quite daunted at the thought of doing any of this on her own as it's a world of the unknown for her. I've mentioned a few of the above options and have suggested we go and see an accountant together but just wondered if anyone had any advice, ideas or suggestions.

Thanks for reading