Low income high assets! FA help!

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Mortgages on rentals depend largely on the income/expense situation of the rental itself. The bank expects you to be able to pay the mortgage from the rental proceeds, with plenty enough left over for taxes, insurance, etc. If OP’s ratio is anything like ours the gross rents would be on the order of $24,000/year or more (don’t know how long last year’s vacancy was).</p>

<p>OP said they bought the condos when real estate was cheaper. Think about the overall situation - they borrowed heavily on their own home to buy 2 condos. But how much could their home have been worth if they were making $50K/year? Maybe $150K? or $300K if they bought a long time ago? And they had enough equity in it to leverage significantly for the condos?</p>

<p>Also, if they sell and the appreciation is significant then they will have a very large capital gain and have to pay a bunch in taxes. It’s not like they are going to be walking around with $600K in their pockets.</p>

<p>woodswoman, would you tell op that her parents should liquidate their retirement funds, 401K, IRA’s and use it for her education?</p>

<p>No, I wouldn’t suggest liquidating protected retirement assets because they are protected. As you know in financial aid it really does matter if your asset is first home equity, not counted for FAFSA and treated better by CSS vs business or rental property. In this case they borrowed from a more protected asset to buy an unprotected asset. That would work if the cash flow was better or the chance for a quick flip profit was there. Based on what we’ve been told that isn’t the case. The best case scenario is to go to a cheaper school, but considering they got into a school with decent need based aid and no merit aid, shifting it back into primary home equity may help in the future.</p>

<p>Do we know if other schools are being considered by the OP? With the stats to be accepted to Penn, he/she would have been able to get a nice merit award at a number of other schools…some guaranteed based on her stats. If she has any awards like that, she should be considering those. Penn is a fabulous school, but not so fabulous that the family should be liquidating their assets to send a student to the school. </p>

<p>Of course, we don’t probably have the whole story, but it sounds like this family wants and needs these condos both for future retirement needs and for current income. </p>

<p>I’m sorry…but my opinion is that the student should be considering other MERIT offers or less expensive schools…if indeed she has any to be considering.</p>

<p>FAFSA and PROFILE are not fair. That is a given. The whole system is not fair in every way. Few if any systems are. </p>

<p>I’ve mentioned before that I know a family very well where the main income provider “retired” very early and bought a lot of real estate, looking for deal. His job became caretaker of the real estate, keeping the units up and rented, doing the accounting, etc. The income was the primary income of the family, and the rental units themselves were intended for old age when he figured he’d not be as able to manage them, as they need constant upkeep. Family income was modest,but they handled things well. My friend was disabled with a number of issues that made the stresses of getting up and to a job regularly difficult if not impossible, so this allowed leeway in the schedule and he and his wife worked together on it.</p>

<p>By the time their son was college age, the real estate boom was on and the unit were valued, as all real estate was at that time sky high. He was accepted to Harvard, and got zero financial aid, even though the family income was modest. And Harvard response upon appeal was pretty much like board members’ here. That they could sell some unit. </p>

<p>The problem, of course, was that was their entire livelihood and selling any of the units affected their income directly and their long term goals.</p>

<p>There was a poster here when I first joined this board called Something Robot who had the same problem with family real estate holding and Yale financial aid. Neither Yale nor Harvard would reconsider the way they assessed real estate. Unlike businesses that get certain assets of the business not included in the value of it, all of what generated the business is included in the asset value for financial aid. Them’s the rules whether it is fair or not. </p>

<p>Don’t know if any of the private student lenders would lien a building in the process of the loans either.</p>