Buying a house to rent to older parents?
December 12, 2014 4:45 PM Subscribe
Did you buy a house to rent to your parents? How did that go? Would you do it if you had it to do over again? Am I off of my own rocker?
My parents have had a financially difficult life. Some of it was caused by their own poor decisions, some bad luck. All of that aside, they are living in their third rented house in six years because the ones they rent keep getting sold and the new owner doesn't want tenants. This has gotten myself and my spouse thinking about buying one to rent to them.
They don't have the credit to qualify for a mortgage on their own, mostly due to not having reestablished credit after a speed bump a few years ago. Until now, they have lived in rental houses that are fantastic deals but the area they live in--and don't want to move from, of course--has rental prices that have now exceeded their affordability. However, purchase prices in their area are still low enough that I could buy one and cover the whole mortgage by renting it to them for their current rent.
My main consideration is them having a place to live where they can stop moving every couple of years. They used to own a house but sold it a several years ago for a little above the remainder of their mortgage balance (it was almost paid off) because the house needed severe foundation work. At the time, none of us could afford to have that work done.
Which brings up another consideration: We (my spouse and I) have the savings and income to afford to take out the mortgage and to carry the whole thing even if my parents pay no money towards it. Both of them are on Social Security so there's little risk of them not paying something and it would be a stretch to make two mortgage payments, but we could do it. My family and my parents don't live in the same place, though I do have siblings who do.
What other questions should I be asking? Is this a bad idea? Are there other ideas to help them out, if I even should? I haven't yet discussed it with my parents because I want to have it settled as something we'd be willing to do.
My parents have had a financially difficult life. Some of it was caused by their own poor decisions, some bad luck. All of that aside, they are living in their third rented house in six years because the ones they rent keep getting sold and the new owner doesn't want tenants. This has gotten myself and my spouse thinking about buying one to rent to them.
They don't have the credit to qualify for a mortgage on their own, mostly due to not having reestablished credit after a speed bump a few years ago. Until now, they have lived in rental houses that are fantastic deals but the area they live in--and don't want to move from, of course--has rental prices that have now exceeded their affordability. However, purchase prices in their area are still low enough that I could buy one and cover the whole mortgage by renting it to them for their current rent.
My main consideration is them having a place to live where they can stop moving every couple of years. They used to own a house but sold it a several years ago for a little above the remainder of their mortgage balance (it was almost paid off) because the house needed severe foundation work. At the time, none of us could afford to have that work done.
Which brings up another consideration: We (my spouse and I) have the savings and income to afford to take out the mortgage and to carry the whole thing even if my parents pay no money towards it. Both of them are on Social Security so there's little risk of them not paying something and it would be a stretch to make two mortgage payments, but we could do it. My family and my parents don't live in the same place, though I do have siblings who do.
What other questions should I be asking? Is this a bad idea? Are there other ideas to help them out, if I even should? I haven't yet discussed it with my parents because I want to have it settled as something we'd be willing to do.
As with everything combining money and family, this seems like the best intentions and a terrible idea.
If you do "rent" them the house, you'll have to be careful about boundaries. What will you and your spouse do if they smoke in the house? Will you have a lease? What if they break elements of the lease? Who will take care of new and recurring maintenance? Etc., etc. This seems like a recipe for disaster.
If they're living in places that are fantastic deals, this is possibly part of why they're losing the places regularly. What about paying a little more for something (possibly could you and your sibs offer to throw in $50 each per month to increase their buying power)? Alternately, could you and your sibs go in together on buying a house that they could stay in?
posted by arnicae at 5:01 PM on December 12, 2014 [2 favorites]
If you do "rent" them the house, you'll have to be careful about boundaries. What will you and your spouse do if they smoke in the house? Will you have a lease? What if they break elements of the lease? Who will take care of new and recurring maintenance? Etc., etc. This seems like a recipe for disaster.
If they're living in places that are fantastic deals, this is possibly part of why they're losing the places regularly. What about paying a little more for something (possibly could you and your sibs offer to throw in $50 each per month to increase their buying power)? Alternately, could you and your sibs go in together on buying a house that they could stay in?
posted by arnicae at 5:01 PM on December 12, 2014 [2 favorites]
I'm the mother of grown kids who could do something like this if I needed it. Paying rent is paying someone else's mortgage and I would much rather pay a mortgage held by one my kids. Your parents might not feel the same way, but I hope they do. How old are they? How long are they likely to live there?
Any chance any of your siblings might want to go in on it with you? And/or could they be counted on to do whatever maintenance needs to be done? Right now if something goes wrong your parents can just call the landlord.
Giving your parents that kind of security, the idea that they can have this home for the rest of lives is a wonderful thing, as long as you look at it that way and they do too. It doesn't sound like they're ever going ot be in a position to buy a house themselves.
Look into the tax benefits and drawbacks. I think there will be more of the former than the latter.
posted by mareli at 5:11 PM on December 12, 2014 [4 favorites]
Any chance any of your siblings might want to go in on it with you? And/or could they be counted on to do whatever maintenance needs to be done? Right now if something goes wrong your parents can just call the landlord.
Giving your parents that kind of security, the idea that they can have this home for the rest of lives is a wonderful thing, as long as you look at it that way and they do too. It doesn't sound like they're ever going ot be in a position to buy a house themselves.
Look into the tax benefits and drawbacks. I think there will be more of the former than the latter.
posted by mareli at 5:11 PM on December 12, 2014 [4 favorites]
Oh, also, the interest rate on a mortgage for a 2nd/non-primary residence home will be higher than you would be able to qualify for on a primary home. You also almost certainly will need 20% down (if not more). Make sure you're taking that into account when pricing this out.
posted by brainmouse at 5:14 PM on December 12, 2014 [1 favorite]
posted by brainmouse at 5:14 PM on December 12, 2014 [1 favorite]
I think with effort and the right attitude by all this could work. Stability is a great gift to your parents.
Having said that, it may be easier and less costly in the long run if you simply help them out with paying rent or co-signing a lease if you just want to not have to deal with this on a regular basis.
posted by 724A at 5:23 PM on December 12, 2014 [4 favorites]
Having said that, it may be easier and less costly in the long run if you simply help them out with paying rent or co-signing a lease if you just want to not have to deal with this on a regular basis.
posted by 724A at 5:23 PM on December 12, 2014 [4 favorites]
Here are my questions:
Why does it have to be a house?
Does it make sense for them to be in an apartment?
How old are they?
What if you or your wife can't work due to unemployment or injury.
Sure you could cover the mortgage, but what if they stop paying, can you cover it with no contribution from them? Do you want to be financially exposed like this? What if the house needs a new roof, or furnace or electrical panel?
Your folks may be eligible for Senior Housing in a very nice apartment, and that's what they should be exploring.
Don't do this. Don't do this. Don't do this. I'm not even kidding.
posted by Ruthless Bunny at 5:26 PM on December 12, 2014 [8 favorites]
Why does it have to be a house?
Does it make sense for them to be in an apartment?
How old are they?
What if you or your wife can't work due to unemployment or injury.
Sure you could cover the mortgage, but what if they stop paying, can you cover it with no contribution from them? Do you want to be financially exposed like this? What if the house needs a new roof, or furnace or electrical panel?
Your folks may be eligible for Senior Housing in a very nice apartment, and that's what they should be exploring.
Don't do this. Don't do this. Don't do this. I'm not even kidding.
posted by Ruthless Bunny at 5:26 PM on December 12, 2014 [8 favorites]
I think this is a fantastic idea. Genuinely.
posted by DarlingBri at 5:28 PM on December 12, 2014 [6 favorites]
posted by DarlingBri at 5:28 PM on December 12, 2014 [6 favorites]
Why not just help them with their rent payments if needed? If you're already thinking of making a 2nd mortgage payment, unless their rent would cover the entirety of the monthly payment, you'd still be subsidizing their housing expenses and shouldering a significant amount of debt and risk to yourself. Unless you have some long term plans for this house once they're gone and are very, very sure of your ability to pay the second mortgage and all the other costs of the second house, this sounds like a colossally bad idea.
posted by Aleyn at 6:14 PM on December 12, 2014
posted by Aleyn at 6:14 PM on December 12, 2014
One consideration is maintenance. If they are older, who will do the maintenance? What if the water heater goes out? Etc. And you are out of town, so who will fix it?
We used to rent from a property management company, and those can be iffy, but Ruthless Bunny's suggestion reminded me that we have a little senior community in my town. It's basically ground level duplexes, really nice area, kind of a little village. Off the main drags, sidewalks, covered front porches. But it blends in well with the rest of the neighborhoods. I guess they might be like ground level condos?
But something like that might have maintenance included. What about a condo?
If it's in a Northern area, then snow plowing and shoveling will have to be taken into account.
I think it's a good idea and your heart is in the right place, but first talk to your siblings and also a tax person and lawyer (or a tax lawyer) and work the numbers for real. Also, what if one of them has to go into a nursing home and the other is there alone? Elder care down the line, etc. How is their health? How is your availability for going back and forth to visit and handle issues? Can you really count on your siblings to take care of things in your absence? Stuff like that.
Or... you could buy a place and hire a property management company to do the maintenance and pay them the fee. There are all kinds of options, so just explore them first and also please include your parents in on your thoughts. Just say, "we'd like to help you, what do you think would be best for you?" Because parents aren't children, they are adults, and they still have agency, despite their ups and downs. And they sure did a good job raising you!
posted by Marie Mon Dieu at 6:21 PM on December 12, 2014 [4 favorites]
We used to rent from a property management company, and those can be iffy, but Ruthless Bunny's suggestion reminded me that we have a little senior community in my town. It's basically ground level duplexes, really nice area, kind of a little village. Off the main drags, sidewalks, covered front porches. But it blends in well with the rest of the neighborhoods. I guess they might be like ground level condos?
But something like that might have maintenance included. What about a condo?
If it's in a Northern area, then snow plowing and shoveling will have to be taken into account.
I think it's a good idea and your heart is in the right place, but first talk to your siblings and also a tax person and lawyer (or a tax lawyer) and work the numbers for real. Also, what if one of them has to go into a nursing home and the other is there alone? Elder care down the line, etc. How is their health? How is your availability for going back and forth to visit and handle issues? Can you really count on your siblings to take care of things in your absence? Stuff like that.
Or... you could buy a place and hire a property management company to do the maintenance and pay them the fee. There are all kinds of options, so just explore them first and also please include your parents in on your thoughts. Just say, "we'd like to help you, what do you think would be best for you?" Because parents aren't children, they are adults, and they still have agency, despite their ups and downs. And they sure did a good job raising you!
posted by Marie Mon Dieu at 6:21 PM on December 12, 2014 [4 favorites]
My two big questions for a plan like this, which i've seen people distantly in my circle do within their families, is:
A. what happens to the house when they can't live their anymore? sell it? keep renting it to someone else from craigslist?
B. what happens if you need to sell it in like a year, or two years? Is the market there strong enough that it would quickly sell? or is this kinda out of a major area somewhat where it would sell glacially and you might have to take a lower offer that essentially means you rented the place and probably lost money on maintenance/closing costs/etc if you had to pay those by then. Especially if you just spent 4 or 5 figures on new HVAC or something.
Your folks may be eligible for Senior Housing in a very nice apartment, and that's what they should be exploring.
Yea i mean, i don't know if this an option where you live, but in my city my parents ended up with separate(which was optional, but worked out well for various reasons) very nice apartments in a brand new building for seriously like 1/3rd or less of the normal market value for a decent sized apartment in a brand new building. with underground parking! and an elevated courtyard with grills! and like... everything new "luxury" apartments in town have now.
It's not a retirement home or anything, it's just a really nice apartment building thats subsidized in some way. It's seriously so cheap that you'd have to drive 30-60 minutes out of town on the freeway to find something comparably priced, and they live like 5 blocks from me now. I'm seriously talking about a place that would probably be $2200 a month on the open market for like $750 or something.
posted by emptythought at 6:32 PM on December 12, 2014 [1 favorite]
A. what happens to the house when they can't live their anymore? sell it? keep renting it to someone else from craigslist?
B. what happens if you need to sell it in like a year, or two years? Is the market there strong enough that it would quickly sell? or is this kinda out of a major area somewhat where it would sell glacially and you might have to take a lower offer that essentially means you rented the place and probably lost money on maintenance/closing costs/etc if you had to pay those by then. Especially if you just spent 4 or 5 figures on new HVAC or something.
Your folks may be eligible for Senior Housing in a very nice apartment, and that's what they should be exploring.
Yea i mean, i don't know if this an option where you live, but in my city my parents ended up with separate(which was optional, but worked out well for various reasons) very nice apartments in a brand new building for seriously like 1/3rd or less of the normal market value for a decent sized apartment in a brand new building. with underground parking! and an elevated courtyard with grills! and like... everything new "luxury" apartments in town have now.
It's not a retirement home or anything, it's just a really nice apartment building thats subsidized in some way. It's seriously so cheap that you'd have to drive 30-60 minutes out of town on the freeway to find something comparably priced, and they live like 5 blocks from me now. I'm seriously talking about a place that would probably be $2200 a month on the open market for like $750 or something.
posted by emptythought at 6:32 PM on December 12, 2014 [1 favorite]
A house is a lot of work for everyone. Sure, it's nice to live in a house, but maybe they can transition to an apartment or a rental duplex or something like that? General maintenance on a house is labor intensive and can be costly. Yards are hard to take care of when you're getting older. Additionally, you'll be on the hook for major repairs that are sure to come up. Being a renter can help to take some of that burden off and also give them some stability as their home won't be sold out from under them.
If they can't afford an apartment that they'd like, you and your siblings can pitch in a bit to get them something that everyone can be happy with. I think it's a better, more secure solution that can also be adjusted more easily if their needs suddenly change.
Also, if they don't have a lot of assets and are living on Social Security, there are great programs for low-income seniors that could also have them in a very nice, yet affordable apartment. Depending on your area, there may be waiting lists, but it's worth looking into.
Beware of making real estate investments for emotional reasons. That's how people get into trouble.
posted by quince at 6:36 PM on December 12, 2014 [2 favorites]
If they can't afford an apartment that they'd like, you and your siblings can pitch in a bit to get them something that everyone can be happy with. I think it's a better, more secure solution that can also be adjusted more easily if their needs suddenly change.
Also, if they don't have a lot of assets and are living on Social Security, there are great programs for low-income seniors that could also have them in a very nice, yet affordable apartment. Depending on your area, there may be waiting lists, but it's worth looking into.
Beware of making real estate investments for emotional reasons. That's how people get into trouble.
posted by quince at 6:36 PM on December 12, 2014 [2 favorites]
I don't think it's doomed to failure--I've seen renting to relatives work, including in my own family, and as long as everyone has clearly-understood, well-matched expectations, it can work well. I do think, though, that as Marie Mon Dieu and brainmouse point out, you might be underestimating the amount of work and hassle involved.
The major difference between your scenario and ones that I've seen work is that I've never heard of anyone buying a house for this reason. In general, the property is what drives the arrangement--the person who owns the house/apartment can't use it for whatever reason, selling is not a desirable option (the market is bad or it's a house that people want to "keep in the family", etc.), and, understandably, people who aren't experienced landlords usually don't want to put in the time and risk associated with finding tenants. Renting to a family member is a compromise way to get some income and use out of the property without putting in a lot of effort or having to hire a broker or property manager, and doing something nice for the renting family member is a factor, but rarely the sole motivation.
posted by kagredon at 6:39 PM on December 12, 2014
The major difference between your scenario and ones that I've seen work is that I've never heard of anyone buying a house for this reason. In general, the property is what drives the arrangement--the person who owns the house/apartment can't use it for whatever reason, selling is not a desirable option (the market is bad or it's a house that people want to "keep in the family", etc.), and, understandably, people who aren't experienced landlords usually don't want to put in the time and risk associated with finding tenants. Renting to a family member is a compromise way to get some income and use out of the property without putting in a lot of effort or having to hire a broker or property manager, and doing something nice for the renting family member is a factor, but rarely the sole motivation.
posted by kagredon at 6:39 PM on December 12, 2014
Just to give you some success stories
I know some people who are doing this very successfully with their parents so that the parents could live near them in their extremely high COL area. It's working out well for everyone so far, but the parents in question are not really poor, just middle class, and the couple in question have enough money to absorb unexpected repairs, etc.
My parents also bought a condo where my disabled aunt and my stepmother's father lived together as roommates very successfully. They both died after a few years and my folks sold the condo.
I think that everyone has brought up good points about non-mortgage expenses, etc, as well as your parents' general health and preferences, but it's worked out very well for my friends and my family.
posted by The Elusive Architeuthis at 6:43 PM on December 12, 2014 [1 favorite]
I know some people who are doing this very successfully with their parents so that the parents could live near them in their extremely high COL area. It's working out well for everyone so far, but the parents in question are not really poor, just middle class, and the couple in question have enough money to absorb unexpected repairs, etc.
My parents also bought a condo where my disabled aunt and my stepmother's father lived together as roommates very successfully. They both died after a few years and my folks sold the condo.
I think that everyone has brought up good points about non-mortgage expenses, etc, as well as your parents' general health and preferences, but it's worked out very well for my friends and my family.
posted by The Elusive Architeuthis at 6:43 PM on December 12, 2014 [1 favorite]
I read a powerful chapter in The Millionaire Next Door (I think) about this theory called Economic Outpatient Care which kind of said that if you pick up some of the costs of living for people, it doesn't always or even often position them to do better for themselves. What tends to happen is then they are in an area where they see the people around them having a certain lifestyle and then they either want that lifestyle, and get spendy, or feel disadvantaged.
I don't know if this applies to parents; the book was geared towards parents of adult children. But my husband and I have been pretty careful to keep our housing in an area where it matches our incomes, so that we're not the only ones driving 5+ year old cars, etc. and I have to say it's kept our lives kind of more fun. Our neighbourhood friends throw potlucks and have "bring your own meat and booze" barbecues, and we really enjoy that.
So I wonder if helping your parents make a transition to an area nearby or a coop or something that matches their income better would be a better use of resources.
posted by warriorqueen at 6:52 PM on December 12, 2014 [6 favorites]
I don't know if this applies to parents; the book was geared towards parents of adult children. But my husband and I have been pretty careful to keep our housing in an area where it matches our incomes, so that we're not the only ones driving 5+ year old cars, etc. and I have to say it's kept our lives kind of more fun. Our neighbourhood friends throw potlucks and have "bring your own meat and booze" barbecues, and we really enjoy that.
So I wonder if helping your parents make a transition to an area nearby or a coop or something that matches their income better would be a better use of resources.
posted by warriorqueen at 6:52 PM on December 12, 2014 [6 favorites]
I've seen it work. Unexpected benefit, in that case at least - the parents were happy to feel they were contributing to their children's welfare. It helped them establish a sense of legacy (under the logic that this house was a 'family' house, 'for the children'.) In that case, there was no question of non-payment of rent, a) because the parents wouldn't dream of it and b) because they'd set up a joint bank account with their kids, from which mortgage payments were made; pensions went into that automatically. If there's goodwill on both sides, totally do it.
I'd get a condo, though, not a house, because 1) it's about 1 million times easier to handle maintenance issues and 2) most condos have better accessibility (no stairs; elevators) - this can make a huge difference in terms of your parents' quality of life later on, if they encounter mobility issues. If you can find a place in a good location, with maybe a main street nearby, so they can go out and do things without a car if they have to, and the maintenance fees are low, fantastic.
posted by cotton dress sock at 6:59 PM on December 12, 2014 [2 favorites]
I'd get a condo, though, not a house, because 1) it's about 1 million times easier to handle maintenance issues and 2) most condos have better accessibility (no stairs; elevators) - this can make a huge difference in terms of your parents' quality of life later on, if they encounter mobility issues. If you can find a place in a good location, with maybe a main street nearby, so they can go out and do things without a car if they have to, and the maintenance fees are low, fantastic.
posted by cotton dress sock at 6:59 PM on December 12, 2014 [2 favorites]
Also, what if one of them has to go into a nursing home and the other is there alone? Elder care down the line, etc.
It may actually be cheaper to get a live-in carer than it would be to go with the home. And, the mortgage payments would be adding up to something.
posted by cotton dress sock at 7:03 PM on December 12, 2014
It may actually be cheaper to get a live-in carer than it would be to go with the home. And, the mortgage payments would be adding up to something.
posted by cotton dress sock at 7:03 PM on December 12, 2014
I want to +1 everyone who said that non-mortgage expenses can really, really add up. Especially maintenance and repairs: I've seen this trip up older homeowners time and again. Many times, older people (like 70+) can't deal with and/or can't afford maintenance and repairs, and that leads to big, expensive issues for whoever inherits or owns the house. And, unless you or your parents can afford a service, yard work is something older people often have trouble with.
You mention that it's cheaper to buy rather than rent in the area where your parents live. Unless there are compelling reasons to buy a house, it would be wise to get a condo instead. That way there won't be any yard care issues, and maintenance will be much less hassle.
Senior housing is another great idea - your parents might be eligible for a subsidy; even if not, they could get a nice small place that would be easy to care for, and most senior housing complexes have pools, etc. and sometimes recreational activities on-site. And they might find it easier to make friends there.
And what about your siblings? They should be pitching in if at all possible.
If you want to buy your parents a place to live, that's great. But not a house - a condo or even a townhouse is a much better (and less expensive, and less hassle!) idea.
posted by Rosie M. Banks at 7:26 PM on December 12, 2014 [1 favorite]
You mention that it's cheaper to buy rather than rent in the area where your parents live. Unless there are compelling reasons to buy a house, it would be wise to get a condo instead. That way there won't be any yard care issues, and maintenance will be much less hassle.
Senior housing is another great idea - your parents might be eligible for a subsidy; even if not, they could get a nice small place that would be easy to care for, and most senior housing complexes have pools, etc. and sometimes recreational activities on-site. And they might find it easier to make friends there.
And what about your siblings? They should be pitching in if at all possible.
If you want to buy your parents a place to live, that's great. But not a house - a condo or even a townhouse is a much better (and less expensive, and less hassle!) idea.
posted by Rosie M. Banks at 7:26 PM on December 12, 2014 [1 favorite]
It's always important to think hard if you're considering doing something to financially benefit a person or people who cannot afford to do that thing themselves "in part because of their bad financial decisions."
Just because they are on Social Security doesn't mean that they will never have an issue with paying the rent… there are lots of people on Social Security who don't always pay their bills. And you'd be put in an incredibly awkward position if they fell behind on payments to you because you don't want to get tough with your parents and they know that you're not going to evict them, etc, which might cause them to take you less seriously as landlords.
If you've considered that risk and felt you could afford to take it (along with the other risks regarding cost and repairs - and I 100% agree that you should be looking at something extremely low maintenance like a condo, make sure whatever you get it is accessible by elevator/single story ideally) then I do think that it would be a very nice thing to do. My parents helped me purchase multiple houses by putting up down payments for me or giving me a private mortgage. If I ever needed to I'd absolutely repay the favor.
posted by treehorn+bunny at 8:37 PM on December 12, 2014 [4 favorites]
Just because they are on Social Security doesn't mean that they will never have an issue with paying the rent… there are lots of people on Social Security who don't always pay their bills. And you'd be put in an incredibly awkward position if they fell behind on payments to you because you don't want to get tough with your parents and they know that you're not going to evict them, etc, which might cause them to take you less seriously as landlords.
If you've considered that risk and felt you could afford to take it (along with the other risks regarding cost and repairs - and I 100% agree that you should be looking at something extremely low maintenance like a condo, make sure whatever you get it is accessible by elevator/single story ideally) then I do think that it would be a very nice thing to do. My parents helped me purchase multiple houses by putting up down payments for me or giving me a private mortgage. If I ever needed to I'd absolutely repay the favor.
posted by treehorn+bunny at 8:37 PM on December 12, 2014 [4 favorites]
I don't know how old your parents are but before you do this I think you should sit down with them and have a good talk about what they want for the next step into the future. It's possible they're tired of yard work and paying the utilities that go with a house, shoveling the driveway, worrying about the roof or the plumbing, etc. There's even a certain amount of social isolation to older people living by themselves in their house - and if one of them has a health crisis, the other one can feel pretty helpless to handle it all. If, by chance, they'd be interested in living in a seniors apartment complex where the yard work and maintenance are all taken care of, where there are other seniors to socialize with if they feel like it (don't have to if they don't want to), where utilities are paid and there's no snow shoveling to do - that's something to consider. I wasn't sure about the idea at all, but I've been here for seven years now and I love it. We have a library (and the city library comes once a month), a big-screen TV for football (!!) and movies, live music, BBQs, knitting groups, other handcraft groups, game groups, cards, bingo, pool - and a pretty yard where garden-types can plant and fuss with flowers or veggies - and lots of other stuff. It may not be their cup of tea at all, but it might be a good idea to find out if they really want to do a house again.
I have a dear friend who's 75 years old and still working full-time even though her health is terrible because she's still paying on her mortgage. It's not going to be surprising to me if she's in need of long-term health care before too long (I hope I'm wrong) but when that day comes, she'll need help from the State and the only way she'll get it is by signing her home over to them. She wants to think she'll be able to leave the house to her boys, but that's not likely from what I can see - and if she didn't own a home, she'd get the same help from the State anyway. Point being only this: If you DO buy a home for your parents, don't put it in their names.
Good luck.
posted by aryma at 9:19 PM on December 12, 2014 [1 favorite]
I have a dear friend who's 75 years old and still working full-time even though her health is terrible because she's still paying on her mortgage. It's not going to be surprising to me if she's in need of long-term health care before too long (I hope I'm wrong) but when that day comes, she'll need help from the State and the only way she'll get it is by signing her home over to them. She wants to think she'll be able to leave the house to her boys, but that's not likely from what I can see - and if she didn't own a home, she'd get the same help from the State anyway. Point being only this: If you DO buy a home for your parents, don't put it in their names.
Good luck.
posted by aryma at 9:19 PM on December 12, 2014 [1 favorite]
One last thought - big moves are harder on people the older they get, and with some conditions that can occur with advanced age, familiarity with one's surroundings becomes very important. The earlier they can get into a groove somewhere, the better for them.
(Wrt to the joint account mentioned above - I don't think it was the parents' whole pensions just went in, just the amount for the rent. And, I think the kids had PoA as well, just in case health issues interfered at some future date, though I don't think they've had to use it. Something else to discuss, maybe.)
posted by cotton dress sock at 10:41 PM on December 12, 2014
(Wrt to the joint account mentioned above - I don't think it was the parents' whole pensions just went in, just the amount for the rent. And, I think the kids had PoA as well, just in case health issues interfered at some future date, though I don't think they've had to use it. Something else to discuss, maybe.)
posted by cotton dress sock at 10:41 PM on December 12, 2014
I have an acquaintance (an only child in his late 20s) who is doing this exact thing for his retired parents. In this situation, the child bought a duplex, rents one unit to a regular tenant and one unit to his parents. The regular tenant's market rate rent covers a large portion of the mortgage and allows him to rent the other unit to his parents at a significantly discounted rate without actually paying much himself. If the rental rates in their preferred neighborhood are going up but the purchase prices are still somewhat reasonable, you might be able to work out a similar situation. Obviously being a landlord comes with it's own issues and complications that should be considered independently, but it might make it financially easier for you to pull this off.
posted by mjcon at 1:39 PM on December 13, 2014
posted by mjcon at 1:39 PM on December 13, 2014
Don't rent to a tenant that you would not evict.
posted by Tanizaki at 4:03 PM on December 13, 2014 [1 favorite]
posted by Tanizaki at 4:03 PM on December 13, 2014 [1 favorite]
Another vote for "what happens if they decline and need to live somewhere with assistance?" My parents did this for my grandparents, buying a condo in an "active adult" community. Within two years, my grandfather had died, and my grandmother had declined to the point where in home assistance was not enough, and she needed round the clock care. They ended up taking a bath when they went to sell it. So, strongly consider what would happen in that scenario.
posted by bluloo at 8:51 PM on December 13, 2014 [2 favorites]
posted by bluloo at 8:51 PM on December 13, 2014 [2 favorites]
There is not enough information to judge whether it is a bad or good idea.
It is not in principle a bad idea nor a good idea. If you are doing this with the expectation of breaking even or making a small profit that is one idea. If you are willing to spend money as a way to allow your parents to have housing stability as much as possible for the rest of their lives that is a different idea.
I have known people with lavish "second homes" and I have known people who have bought a house for the kid to live in while they went to college. A lot of people are piling on with negative predictions without knowing what your situation is.
posted by Pembquist at 10:48 PM on December 13, 2014
It is not in principle a bad idea nor a good idea. If you are doing this with the expectation of breaking even or making a small profit that is one idea. If you are willing to spend money as a way to allow your parents to have housing stability as much as possible for the rest of their lives that is a different idea.
I have known people with lavish "second homes" and I have known people who have bought a house for the kid to live in while they went to college. A lot of people are piling on with negative predictions without knowing what your situation is.
posted by Pembquist at 10:48 PM on December 13, 2014
I know nothing about the rest of this, but keep in mind that if they come into a position where they might need/choose to seek HUD vouchers to help pay rent, you are not an eligible landlord. (Too closely related.)
posted by stormyteal at 5:25 PM on December 14, 2014
posted by stormyteal at 5:25 PM on December 14, 2014
Regarding the comments about the taxes, insurance and interest rates being higher due to this being a rental property: I know a family in a similar situation and they don't have higher costs because the owner and renter are immediate family members. I believe both the bank and the city/county required documentation of the situation.
posted by soelo at 1:16 PM on December 15, 2014
posted by soelo at 1:16 PM on December 15, 2014
This thread is closed to new comments.
posted by brainmouse at 4:58 PM on December 12, 2014 [4 favorites]