My Best Investment

     A few years ago, I made my best investment ever when I purchased the house I grew up in from my parents. It was a very special situation because I was able to apply financial education in a way that helped everyone involved in the transaction. My parents, who were right at retirement age, walked away with a check and the new house of their dreams.

     My mother actually presented me with the idea, and after running the numbers, it made sense. The play was to convert the property into a rental unit. Once everyone was on board with the sales price, the ball began rolling. I had my lawyer, an old schoolmate and friend, draft the sales agreement. (She would later tell me that the work she did gave her points in her law firm.)

     At closing, once all the documents were signed, my parents received the payment. As there were no loans on the property, my parents received a nice cushion for retirement. They would use a portion of the proceeds to pay off other debts.

     As an investment, the house provided the fortunate situation where the tenant provided the mortgage payment and additional income. I would be able to recoup my initial investment a little after two years. Presently, the property continues to cash flow.

     The purpose of this example is to demonstrate the importance of financial education and seeing things from the perspective of an investor. Essentially what occurred was me taking out a loan for an asset purchase, which someone else pays for in exchange for quality, affordable housing. The home sale gave my parents room to maneuver in retirement, and the property even cash flows monthly, providing me with a small income. Everybody wins. That a boy.

Entertain money.