Sell Condo Or Rent?
Should her children sell the condo and fund her assisted living expenses for 3 more years?
QUESTION: John’s mother owns a condo in Arizona and rents it out while she lives in an assisted living facility. She will run out of money in 6 months. Should her children sell the condo and fund her assisted living expenses for 3 more years?
ANSWER: The core question is whether to liquidate or invest. Sunk cost has to do with staying in a certain investment, and you have sunk costs right now. Look at your situation in reverse, and if you wouldn’t do it knowing what you know now, then you need to undo it.
For example, if your mom had money in a money market account, would she take that and buy a rental property? If the answer is no, then you need to sell the property. The fact that you have the property is making you ask yourself if you should hold onto it. When you look at it from another perspective, you can see that you should absolutely sell it.