Buying a house from a relative over time?
November 28, 2024 9:49 PM Subscribe
Short version: My sister lives in the house we grew up in. It's fully paid off. She and her husband have ongoing money struggles. I'd like to help them out by buying the house from them slowly, thereby providing an income stream for them. Of course, there's lots of snowflakes inside:
My sister J and her husband D live in the house that J and I grew up in. They moved back in for the last few years of my parents' lives to help out. After they died, J and I inherited the house jointly. She and D wanted to stay there, so she bought me out of my half.
Flash forward a few years; J and D have had some financial challenges; they both have a combination of physical and mental health issues that make it hard to earn a living. They make some money through work and benefits, but not quite enough to get by. They're in their late 50s; not quite old enough for Social Security or Medicare. But they live in a fully paid-off house worth somewhere in the mid 400s. We'd like to take advantage of that equity without a HELOC or reverse mortgage; our goal is for J and D to stay in the house for the rest of their lives.
I have a decent amount of money saved up for retirement; not enough to support them, and not enough to buy the house outright, but maybe enough to redirect some into another investment. J and D don't have kids, and no real plans for the house after they die (D's nieces are their beneficiaries), so leaving it to someone is not a priority.
So what I'd like to do is to buy the house from them over time. This way they can get additional monthly income and I can someday get my money back. I'm planning to talk to a real estate attorney, but I'd love to hear if anyone has done something like this, whether it worked, what questions to ask, and so on.
My basic thought is this: We would agree on a valuation for the house, and then divide that into a number of shares, each valued at $1000. Each time J needed money, she would sell me a share of the house. If/when she and D pass away, the house would be sold and the proceeds divided proportionally. (If I go first, my share goes to my family) We would also proportionally split the costs of property tax and insurance. If I wound up buying the entire house (seems unlikely but you never know), I'd let them live there rent-free and we'd figure out something else.
So, is this possible? Have you ever done something like this? Should we consider creating an LLC to own the property? Any other wisdom?
My sister J and her husband D live in the house that J and I grew up in. They moved back in for the last few years of my parents' lives to help out. After they died, J and I inherited the house jointly. She and D wanted to stay there, so she bought me out of my half.
Flash forward a few years; J and D have had some financial challenges; they both have a combination of physical and mental health issues that make it hard to earn a living. They make some money through work and benefits, but not quite enough to get by. They're in their late 50s; not quite old enough for Social Security or Medicare. But they live in a fully paid-off house worth somewhere in the mid 400s. We'd like to take advantage of that equity without a HELOC or reverse mortgage; our goal is for J and D to stay in the house for the rest of their lives.
I have a decent amount of money saved up for retirement; not enough to support them, and not enough to buy the house outright, but maybe enough to redirect some into another investment. J and D don't have kids, and no real plans for the house after they die (D's nieces are their beneficiaries), so leaving it to someone is not a priority.
So what I'd like to do is to buy the house from them over time. This way they can get additional monthly income and I can someday get my money back. I'm planning to talk to a real estate attorney, but I'd love to hear if anyone has done something like this, whether it worked, what questions to ask, and so on.
My basic thought is this: We would agree on a valuation for the house, and then divide that into a number of shares, each valued at $1000. Each time J needed money, she would sell me a share of the house. If/when she and D pass away, the house would be sold and the proceeds divided proportionally. (If I go first, my share goes to my family) We would also proportionally split the costs of property tax and insurance. If I wound up buying the entire house (seems unlikely but you never know), I'd let them live there rent-free and we'd figure out something else.
So, is this possible? Have you ever done something like this? Should we consider creating an LLC to own the property? Any other wisdom?
I disagree, that's the point of an investment is that you bought something early at one price and it gained value during the time you held it. There's also the risk that her family or the neighbourhood lower the property's value in the coming years. OP, if you intended to leave your share to your family there is no guarantee they won't demand their share straight out, putting your sister at risk of having to leave the home. You probably feel you will outlive her, but you could be gone tomorrow. You probably belive your kids would never put her out of the home, but I've seen plenty of times what people will justify to themselves after a loss, the need to build buffers and "protection" especially for their own kids can be overwhelming.
posted by Iteki at 12:34 AM on November 29, 2024 [8 favorites]
posted by Iteki at 12:34 AM on November 29, 2024 [8 favorites]
I am not a lawyer but did at one point consider buying an investment property as a place for my mother to live... so I've thought through some related contingencies and dealt with the drama of pulling out of discussions with her.
The cleanest way to do this might be for them to sell the house to you for market value and then pay you market-value rent indefinitely. But it sounds like you can't afford the market-value purchase price. I guess they could use the sale proceeds to pay rent to you for some time, but it also sounds like that might run out before their deaths.
Another way to avoid the incremental ownership would be for them to sell you the house at less than full market value, with the discounted price being an exchange for their right to live there rent-free for the remainder of their lives. As others have said, this is more or less a reverse mortgage deal with you acting in the bank's place. My concern is that since you're not a bank you won't have full protection against various contingencies that arise...
One contingency: who are the tenants whose rent-free occupancy you are guaranteeing? What if your sister dies first, her husband remarries, and his new partner wants to move in? Then what if he dies before the new partner? What if no one has died or remarried, but they move in a niece to help them continue to live at home as they age? What are the laws and processes governing eviction of non-paying tenants where the house is located, and how would you feel about enforcing them against another relative?
Another: whose responsibility are repairs needed to preserve the value of the home? Do you live locally or would you be dependent on their judgment regarding what repairs are necessary? In your incremental ownership model, if you pay for repairs, does 100% of that value go toward buying more 'shares' of the house? Or is it more like a special assessment in a condo ownership model? (I'd be strongly inclined to avoid the incremental ownership model, but see what your real-estate lawyer says...)
What happens if a visitor, handyperson, or contractor is injured on the property? Does that in any way create a liability for you? My guess is that it would if your name was on the deed, but if your name isn't on the deed you have risk of not properly inheriting the property. As residents, your sister and her husband will be making decisions about the activities that take place on the property. It sounds like they have fewer assets worth protecting in a civil suit than you do.
Is the house more house than they need? Is it an option for them to sell it and downsize? Is preserving family ownership of your childhood home a sentimental motivation for you? If so, how do the known costs and potential risks stack up to that?
posted by aincandenza at 6:17 AM on November 29, 2024 [8 favorites]
The cleanest way to do this might be for them to sell the house to you for market value and then pay you market-value rent indefinitely. But it sounds like you can't afford the market-value purchase price. I guess they could use the sale proceeds to pay rent to you for some time, but it also sounds like that might run out before their deaths.
Another way to avoid the incremental ownership would be for them to sell you the house at less than full market value, with the discounted price being an exchange for their right to live there rent-free for the remainder of their lives. As others have said, this is more or less a reverse mortgage deal with you acting in the bank's place. My concern is that since you're not a bank you won't have full protection against various contingencies that arise...
One contingency: who are the tenants whose rent-free occupancy you are guaranteeing? What if your sister dies first, her husband remarries, and his new partner wants to move in? Then what if he dies before the new partner? What if no one has died or remarried, but they move in a niece to help them continue to live at home as they age? What are the laws and processes governing eviction of non-paying tenants where the house is located, and how would you feel about enforcing them against another relative?
Another: whose responsibility are repairs needed to preserve the value of the home? Do you live locally or would you be dependent on their judgment regarding what repairs are necessary? In your incremental ownership model, if you pay for repairs, does 100% of that value go toward buying more 'shares' of the house? Or is it more like a special assessment in a condo ownership model? (I'd be strongly inclined to avoid the incremental ownership model, but see what your real-estate lawyer says...)
What happens if a visitor, handyperson, or contractor is injured on the property? Does that in any way create a liability for you? My guess is that it would if your name was on the deed, but if your name isn't on the deed you have risk of not properly inheriting the property. As residents, your sister and her husband will be making decisions about the activities that take place on the property. It sounds like they have fewer assets worth protecting in a civil suit than you do.
Is the house more house than they need? Is it an option for them to sell it and downsize? Is preserving family ownership of your childhood home a sentimental motivation for you? If so, how do the known costs and potential risks stack up to that?
posted by aincandenza at 6:17 AM on November 29, 2024 [8 favorites]
It’s a little muddy whether you’re looking for a way to be charitable to your sister, or for an investment.
This part sounds like charity, since you’d potentially pay tax and insurance indefinitely, without getting anything in return (except possible appreciation of the property):
“We would also proportionally split the costs of property tax and insurance. If I wound up buying the entire house (seems unlikely but you never know), I'd let them live there rent-free and we'd figure out something else.”
But there’s also this:
“I have… maybe enough to redirect some into another investment… and I can someday get my money back.”
Are you okay with never getting back any amounts you spend on tax and insurance while they’re living there rent-free? Are you okay with other scenarios where you don’t break even or better? The answers influence the shape of the agreement you’d want to have drawn up.
I agree with the insightful concerns above. If I only had a penguin alluded to it, but more specifically, if they need to move into assisted living or a nursing home someday, and they no longer own their house to sell to pay for that, would you sell to fund their care?
posted by daisyace at 7:12 AM on November 29, 2024 [3 favorites]
This part sounds like charity, since you’d potentially pay tax and insurance indefinitely, without getting anything in return (except possible appreciation of the property):
“We would also proportionally split the costs of property tax and insurance. If I wound up buying the entire house (seems unlikely but you never know), I'd let them live there rent-free and we'd figure out something else.”
But there’s also this:
“I have… maybe enough to redirect some into another investment… and I can someday get my money back.”
Are you okay with never getting back any amounts you spend on tax and insurance while they’re living there rent-free? Are you okay with other scenarios where you don’t break even or better? The answers influence the shape of the agreement you’d want to have drawn up.
I agree with the insightful concerns above. If I only had a penguin alluded to it, but more specifically, if they need to move into assisted living or a nursing home someday, and they no longer own their house to sell to pay for that, would you sell to fund their care?
posted by daisyace at 7:12 AM on November 29, 2024 [3 favorites]
You've probably thought about this but if not, think through scenarios where as you get older you're in need of more financial resources to provide for your own or your family's care. Or things like if you ever need to do a Medicare spend-down (if you're in the US).
You also mentioned physical and mental problems on your sister's and D's side. Will they be able to care for the house? Is it somewhere they can realistically age in place?
posted by trig at 7:59 AM on November 29, 2024 [1 favorite]
You also mentioned physical and mental problems on your sister's and D's side. Will they be able to care for the house? Is it somewhere they can realistically age in place?
posted by trig at 7:59 AM on November 29, 2024 [1 favorite]
One possibility is they sell the house to you, but also finance it, so they get monthly payments instead of lump sum, with a provision in the lease that they can live in the house until certain conditions are met. The problem is agreeing on what those conditions are. As others mentioned, the value of the house may fluctuate, which is a risk you're taking on if you're taking the title of the house. As you're doing this to help them, you're taking on even MORE risk than a pure investor would.
posted by kschang at 10:24 AM on November 29, 2024
posted by kschang at 10:24 AM on November 29, 2024
It does make sense to use an existing financial construct to handle this, but it sounds less like a reverse mortgage and more like a home equity line of credit. What you can do in this case is simply lend your sister the required funds as needed at an agreed upon rate (relative to some established reference rate, like inflation or the fed rate) with an agreement that the full amount owing would be paid back upon the sale of the house. You can use a simple spreadsheet to calculate the interest and track the balance owing.
You can calibrate how much you are helping versus investing by adjusting the interest rate to be more or less generous.
Otherwise, if you're buying shares of the house over time, you'll need to recalculate the house value from time to time in order for things to be fair and that's going to be a potentially fraught process. Splitting the cost of property taxes and insurance also doesn't really make sense if you're not benefitting in any way from the house (so you'd be better off just charging a low interest rate if you want to help out).
If at some future point, you are owed half the value of the house or something like that and you want to discuss converting that debt into an equity stake in the house, you can certainly do that.
posted by ssg at 10:35 AM on November 29, 2024 [3 favorites]
You can calibrate how much you are helping versus investing by adjusting the interest rate to be more or less generous.
Otherwise, if you're buying shares of the house over time, you'll need to recalculate the house value from time to time in order for things to be fair and that's going to be a potentially fraught process. Splitting the cost of property taxes and insurance also doesn't really make sense if you're not benefitting in any way from the house (so you'd be better off just charging a low interest rate if you want to help out).
If at some future point, you are owed half the value of the house or something like that and you want to discuss converting that debt into an equity stake in the house, you can certainly do that.
posted by ssg at 10:35 AM on November 29, 2024 [3 favorites]
Response by poster: Great answers so far - thanks!
A couple more details -
- My thought is that we would agree to periodically reassess the value of the house (we could use the tax assessed value) and increase the value of the shares based on that; that way both parties share proportionally in the increase in valuation.
- You're right that we're basically trying to reinvent a reverse mortgage, but with more protections for J and D - I'm trying to leverage some of the funds I have saved for retirement as a sort of swap with their equity to provide them with a monthly income stream. There's some risk involved, but that's ok.
- J staying in the house for as long as possible is really important for both of us.
- The liability question is one that I've been thinking about, which is why I asked about the LLC. I've seen this done in cases where, for example, family members buy a vacation property together.
posted by chbrooks at 10:56 AM on November 29, 2024
A couple more details -
- My thought is that we would agree to periodically reassess the value of the house (we could use the tax assessed value) and increase the value of the shares based on that; that way both parties share proportionally in the increase in valuation.
- You're right that we're basically trying to reinvent a reverse mortgage, but with more protections for J and D - I'm trying to leverage some of the funds I have saved for retirement as a sort of swap with their equity to provide them with a monthly income stream. There's some risk involved, but that's ok.
- J staying in the house for as long as possible is really important for both of us.
- The liability question is one that I've been thinking about, which is why I asked about the LLC. I've seen this done in cases where, for example, family members buy a vacation property together.
posted by chbrooks at 10:56 AM on November 29, 2024
I'm concerned about how this works out in the end.
Presumably, either the house is sold, or your sister buys you out.
So. Until that happens, how will you make sure the house is insured and maintained? What if your circumstances change and you need that money next year? What events if any will trigger a sale? Suppose you're ready to retire and your sister's and husband are still trucking along and have nowhere else to go?
These kinds of questions are why you need legal advice. Advice that will cover different, unexpected and hopefully unlikely contingencies.
posted by i_am_joe's_spleen at 11:17 AM on November 29, 2024 [2 favorites]
Presumably, either the house is sold, or your sister buys you out.
So. Until that happens, how will you make sure the house is insured and maintained? What if your circumstances change and you need that money next year? What events if any will trigger a sale? Suppose you're ready to retire and your sister's and husband are still trucking along and have nowhere else to go?
These kinds of questions are why you need legal advice. Advice that will cover different, unexpected and hopefully unlikely contingencies.
posted by i_am_joe's_spleen at 11:17 AM on November 29, 2024 [2 favorites]
I may have missed something but I don't understand your endgame plan. If the goal is for J and family to live in the house as long as possible, then how is you 'owning' the house (or part of the house) of any value to you?
I'm concerned that if you think of this as an investment you may be risking your finances and your relationship with your sister. Being your family's landlord is touchy, and needing your family to die so you can finance your retirement is touchier.
posted by eraserbones at 3:20 PM on November 29, 2024 [7 favorites]
I'm concerned that if you think of this as an investment you may be risking your finances and your relationship with your sister. Being your family's landlord is touchy, and needing your family to die so you can finance your retirement is touchier.
posted by eraserbones at 3:20 PM on November 29, 2024 [7 favorites]
I'd structure it as a person-to-person HELOC the way ssg suggests, and I'd only do it if the prospect of the whole thing going to shit and losing everything I'd lent was acceptable.
Getting into a large-scale financial relationship with people who have mental health and/or mental injury issues is super fraught. I've done it, lending a five-figure sum to a friend to help them move from a house they'd inherited in one town to a rental in another, with the loan to be paid back when the original house sold, and the only reason it worked out OK is because they had rich relatives who stepped in and settled the debt when it all got too hard.
posted by flabdablet at 7:38 PM on November 29, 2024 [1 favorite]
Getting into a large-scale financial relationship with people who have mental health and/or mental injury issues is super fraught. I've done it, lending a five-figure sum to a friend to help them move from a house they'd inherited in one town to a rental in another, with the loan to be paid back when the original house sold, and the only reason it worked out OK is because they had rich relatives who stepped in and settled the debt when it all got too hard.
posted by flabdablet at 7:38 PM on November 29, 2024 [1 favorite]
Best answer: From a former lawyer - I no longer practice.
The issue with the shares process - it will require regular revaluation, either for compliance/transfer processes or to be be fair. Maybe the revaluation process will be cheap, but if there is disagreement, it gets expensive and fast.
Consider whether the transaction could be described as a sale at a current fair agreed price and the sellers provide seller/vendor finance, ie. you buy the property but J and D have a mortgage for the unpaid balance, which requires monthly payments and a fixed interest rate, potentially with a mechanism to adjust the interest rate.
This differs from a reverse mortgage as you own the property and if you wish to deal with the property, you need to pay out the balance of the loan, etc.
The risk for you - the value of the property goes down. The risk for J and D - the value of the property goes up.
posted by Barbara Spitzer at 1:58 AM on November 30, 2024 [1 favorite]
The issue with the shares process - it will require regular revaluation, either for compliance/transfer processes or to be be fair. Maybe the revaluation process will be cheap, but if there is disagreement, it gets expensive and fast.
Consider whether the transaction could be described as a sale at a current fair agreed price and the sellers provide seller/vendor finance, ie. you buy the property but J and D have a mortgage for the unpaid balance, which requires monthly payments and a fixed interest rate, potentially with a mechanism to adjust the interest rate.
This differs from a reverse mortgage as you own the property and if you wish to deal with the property, you need to pay out the balance of the loan, etc.
The risk for you - the value of the property goes down. The risk for J and D - the value of the property goes up.
posted by Barbara Spitzer at 1:58 AM on November 30, 2024 [1 favorite]
I think the liquidity question - how do you get your money out when/if you need it? - is a good one. If you become unemployed or injured is that really the point at which you want to have to evict your sister to sell the house?
Also, usually at retirement you also need your principal to produce income, interest or dividends. In this case you only get any gains in the investment when you sell it. Are you sure you can afford to have whatever percentage of your retirement savings this would be not producing any income?
I think you need solid independent financial advice before you need a lawyer and pick a vehicle for lending.
It’s hard to hear maybe but…your sister and her husband are living beyond their means, even without a mortgage. They have at least a decade and maybe more before social security kicks in. Between here and there there aren’t just taxes and insurance but new roofs, furnace, fridge, wear and tear. Obviously they have their struggles and of course you want to help. But maybe keeping the house isn’t the realistic choice. I would proceed with caution.
posted by warriorqueen at 4:06 AM on November 30, 2024 [4 favorites]
Also, usually at retirement you also need your principal to produce income, interest or dividends. In this case you only get any gains in the investment when you sell it. Are you sure you can afford to have whatever percentage of your retirement savings this would be not producing any income?
I think you need solid independent financial advice before you need a lawyer and pick a vehicle for lending.
It’s hard to hear maybe but…your sister and her husband are living beyond their means, even without a mortgage. They have at least a decade and maybe more before social security kicks in. Between here and there there aren’t just taxes and insurance but new roofs, furnace, fridge, wear and tear. Obviously they have their struggles and of course you want to help. But maybe keeping the house isn’t the realistic choice. I would proceed with caution.
posted by warriorqueen at 4:06 AM on November 30, 2024 [4 favorites]
Some of this depends on how well the three of you communicate and work together because if your sibling is incapacitated, their spouse will likely be making decisions on their behalf, regardless of your shared family history. What happens if your sibling passes before their spouse?
Is this ideal housing for them long term? Keep talking to your sibling about their plans and your plans and see what you both come up with. Ideally you are already talking through repairs and maintenance.
Does this asset complicate their ability to access items like lower-cost health insurance or accessible housing? If their health trajectory might head toward this type of need, consulting with an elder law expert with your sibling might be the way to go. Many of them have articles and information on their websites about managing assets for adult family members who may have long term needs…this is a situation that comes up with estate planning and trusts. The practice area is very state specific so look for professionals in the state where the house is located.
posted by childofTethys at 7:55 AM on November 30, 2024 [1 favorite]
Is this ideal housing for them long term? Keep talking to your sibling about their plans and your plans and see what you both come up with. Ideally you are already talking through repairs and maintenance.
Does this asset complicate their ability to access items like lower-cost health insurance or accessible housing? If their health trajectory might head toward this type of need, consulting with an elder law expert with your sibling might be the way to go. Many of them have articles and information on their websites about managing assets for adult family members who may have long term needs…this is a situation that comes up with estate planning and trusts. The practice area is very state specific so look for professionals in the state where the house is located.
posted by childofTethys at 7:55 AM on November 30, 2024 [1 favorite]
I am not a great fan of reverse mortgages, but I think in this case, where there is no real interest in passing the home on to children, it might be better for J & D to get one than to try to home-brew an arrangement between the three of you. They should be able to remain in the house for the rest of their lives (a surviving spouse can remain even if the house was in the other spouse’s name). The main thing is to do the math carefully to make sure that their other income + the monthly payment from the mortgage will be sufficient to cover their expenses, including taxes and insurance, for which they would still be responsible. However, they’ll have to get by untl J is 62 (minimum age for reverse mortgages).
posted by praemunire at 9:31 AM on November 30, 2024
posted by praemunire at 9:31 AM on November 30, 2024
Best answer: If you buy the home with seller financing, then you need to consider that in addition to the money that you are buying J for the mortgage, you will also have to pay for taxes and insurance as well as the cost of maintaining the property (since it is yours).
So, you may have two cash flowing in two directions:
1. you pay J for the seller financing an amount that includes both the value of the house and reasonable interest for a certain number of years (the IRS has opinion about what is "reasonable" interest - current around 4%
2. J pays you rent for living in your house. This can be lower than market rate but it should be enough to cover taxes, insurance and a fund for repairs. Don't underestimate the cost over time of new furnaces, new roof, replacement water heaters etc. Note that currently those are all J's responsibility. (When we owned a house that was occupied by family, the agreement was that they paid all the regular maintenance costs, we paid for any big capital expenses but they still did the leg work to get any needed repairs to happen.)
You would have to do the math to see how #1 and #2 balance out. If they turn out to be even, then basically you would be letting J live in the house rent free in exchange for you taking on all the costs of the maintaining it for them with ending up with both ownership and possession once the rental period/mortage period ends.
posted by metahawk at 1:35 PM on November 30, 2024
So, you may have two cash flowing in two directions:
1. you pay J for the seller financing an amount that includes both the value of the house and reasonable interest for a certain number of years (the IRS has opinion about what is "reasonable" interest - current around 4%
2. J pays you rent for living in your house. This can be lower than market rate but it should be enough to cover taxes, insurance and a fund for repairs. Don't underestimate the cost over time of new furnaces, new roof, replacement water heaters etc. Note that currently those are all J's responsibility. (When we owned a house that was occupied by family, the agreement was that they paid all the regular maintenance costs, we paid for any big capital expenses but they still did the leg work to get any needed repairs to happen.)
You would have to do the math to see how #1 and #2 balance out. If they turn out to be even, then basically you would be letting J live in the house rent free in exchange for you taking on all the costs of the maintaining it for them with ending up with both ownership and possession once the rental period/mortage period ends.
posted by metahawk at 1:35 PM on November 30, 2024
Response by poster: Thanks, all! Lots of good suggestions here. I've left out lots of relevant personal details, so some advice is more germane than others, but I really appreciate the feedback!
posted by chbrooks at 9:19 PM on November 30, 2024
posted by chbrooks at 9:19 PM on November 30, 2024
This stood out to me:
J and D don't have kids, and no real plans for the house after they die (D's nieces are their beneficiaries)
It stood out because it introduced a wrinkle that may adversely impact your ability to get your money back in the future. No matter how you might finance this or arrange it, there's a (possibly very difficult) conversation to be had about what happens if one or more parties to the arrangement die or become incapacitated to the extent that another party is appointed to make decisions for them. It's not nice to think about, but your sister's husband's nieces could end up deciding your financial future.
Are you sure you can't buy the house outright? It seems like the best way to protect everyone, but mostly you given you are the one taking all the risk in this situation. If you can put your savings towards the purchase price, does that make a loan achievable and can your sister and her husband pay you the cost of the repayments as rent?
Because you mention having savings for retirement, it seems likely you are not too far away from that. If so, it's not a time for investments that have lots of ways to go wrong and a very narrow path to success. I applaud you for wanting to help your sister, but please think carefully about how that may impact your own future.
posted by dg at 6:20 PM on December 1, 2024 [1 favorite]
J and D don't have kids, and no real plans for the house after they die (D's nieces are their beneficiaries)
It stood out because it introduced a wrinkle that may adversely impact your ability to get your money back in the future. No matter how you might finance this or arrange it, there's a (possibly very difficult) conversation to be had about what happens if one or more parties to the arrangement die or become incapacitated to the extent that another party is appointed to make decisions for them. It's not nice to think about, but your sister's husband's nieces could end up deciding your financial future.
Are you sure you can't buy the house outright? It seems like the best way to protect everyone, but mostly you given you are the one taking all the risk in this situation. If you can put your savings towards the purchase price, does that make a loan achievable and can your sister and her husband pay you the cost of the repayments as rent?
Because you mention having savings for retirement, it seems likely you are not too far away from that. If so, it's not a time for investments that have lots of ways to go wrong and a very narrow path to success. I applaud you for wanting to help your sister, but please think carefully about how that may impact your own future.
posted by dg at 6:20 PM on December 1, 2024 [1 favorite]
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Also, when you draw up whatever contracts you draw up remember that the relevant situation that comes up might not be that you die or they die but that they are no longer able to to live in the house and need to sell it because they need to move in to some sort of care.
Finally, if you really want to take ownership of the house instead of just getting paid back, I think it's problematic to value each of the shares at a fixed price on day 1 of the arrangement because the house will appreciate over time. So on day 1 you can buy 1/400th of the house for $1000 but if the house is worth $600K 5 years from now, you shouldn't be able to still buy 1/400th for $1000. If you want 1/400th then, it should cost you $1500. Are you going to have the house re-appraised every time they need money? Or take the base price and add "average house price increase in this city since the appraisal" or what's the plan?
posted by If only I had a penguin... at 10:50 PM on November 28, 2024 [5 favorites]