Buying house with son [and his girlfriend]

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Topic Author
reggiesimpson
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Re: Buying house with son

Post by reggiesimpson »

Darwin wrote: Sat Feb 09, 2019 1:14 am
reggiesimpson wrote: Sat Feb 09, 2019 1:04 am
Darwin wrote: Sat Feb 09, 2019 12:41 am
Jags4186 wrote: Sat Feb 09, 2019 12:08 am
reggiesimpson wrote: Fri Feb 08, 2019 11:20 pm
Agreed but we are not looking for a cheap way out. There are those who dont want to be near their children in retirement and those that do. We are in the latter camp. We look at it as the most fulfilling thing we can do for the remainder of our lives and we are looking forward to it very much. It wont be easy and its not easy now but that doesnt mean its not worthwhile. I came on to BH to hear what my fellow BH have always provided. Stimulating thoughts, information and ideas that will make our path smoother. Thank you
reggie
Ask yourself this question. Is your son into this idea because you’re allowing him to buy a house he otherwise wouldn’t be able to afford...
I see this as a key point. We live above our means. Propping up another generation to expect too much might not help them. And I say this as a kid coming from the other direction, with a dad who stole my money even when he was financially secure and I wasn't. Sometimes trying to help your offspring can cripple them. But, I have to say, I salute you for trying to do the right thing. I'm actually an optimistic person on these shared-land subjects, which is why it took me an embarrassing THREE tries (two with friends, last with Dad) to realize that it isn't a good idea.
Yes i realize this idea is a bit unusual but i to am optimistic about it and we see it as the most fulfilling adventure we can do for the remainder of our lives. As far as our son needing propping up i hear you but he has already performed eminently well in his chosen profession as as his gf in hers. Its an experiment for sure but i suspect things are going to work out greater than expected. Thank you
reggie.
In that case, I give you all two thumbs up. I wish you well, and hope things work out. I admit, my instincts were always that this OUGHT to work! It's all about the personalities, and communication. This is really the test, whether both of you are putting family before finance.
Agreed. Thank you for the thumbs up. We are quite optimistic.
reggie.
Topic Author
reggiesimpson
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Re: Buying house with son

Post by reggiesimpson »

Flyer24 wrote: Sat Feb 09, 2019 1:23 am I see very few if any on here think it is a good idea. Cut the strings and let your son be on his own. Find a VRBO when you want to visit. I have a great relationship with my wife’s parents but there is zero chance that I would want them to have partial ownership of my house. It is just a terrible idea.
My son will inherit back our half of the house when the time comes. He can do whatever he wants with it at that point. Thank You.
reggie
JustinR
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Re: Buying house with son

Post by JustinR »

reggiesimpson wrote: Sat Feb 09, 2019 12:29 am Well i certainly understand those concerns but. The areas that have the better school systems (think grandchildren) are beyond their reach but not ours. So we help. If he could afford to do this comfortably on their own they may have gone for it but they cant and maybe they never will be able as the homes in solid school districts within job commute are astronomical. I took the long view with him when i first brought this up. Not just the money to help purchase and maintain a home but the presence of grandparents ( hers live nearby) to help taking care of future grandchildren as one example of an asset thats non financial. As i mentioned earlier Asian, Hispanic and Black cultures have always embraced multigenerational living as the norm and its only recently that Whites are seeing the wisdom along with changing town zoning laws. It is reducing the stress on nursing homes and day care centers. Im 71 and my wife is 68. Her parents are 60 and 64. None of us are dead, divorced or disabled. We cant think of anything more fulfilling than doing what we are proposing. Thank you
reggie
reggiesimpson wrote: Fri Feb 08, 2019 11:31 pm I may have explained much of what you commented on in recent posts. Interestingly from my readings and from calling various town clerks offices and real estate agencies more and more couples and parents are looking for in law apts with their home purchases. Towns are amending their zoning bylaws to accommodate this demand. The reason is simple. The parents have the money and the children dont and the need to take care of grandchildren and eventually grandparents is a pressing issue that is being resolved with multigenerational living. While its been popular with Hispanic, Black and Asian communities for years it has been catching on with Whites over the past 20 years. So what i am bringing up is the wave of the present, past and future living in America. Thank you.
reggie
The issue isn't "multigenerational living." It's everyone owning the house.

I doubt in "Hispanic, Black, and Asian communities" that everyone in the family owns the house.

It's more common that the parents own it and the kids live in it, and then it's passed on when they die. So what you're trying to do has nothing in common with that.
mortfree
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Re: Buying house with son

Post by mortfree »

reggiesimpson wrote: Fri Feb 08, 2019 10:29 pm
delamer wrote: Fri Feb 08, 2019 10:20 pm Your subject line is inaccurate. It should be “buying house with son and his girlfriend.”

Don’t do it.

Have you thought about what happens if one (or both) of them loses their job(s) and they can’t pay the mortgage or your son dies prematurely?

The “what if they split up” scenario is only one thing that can go wrong.
Yes his GF is involved but must sign an agreement that stipulates the house must be sold immediately if they split up before marriage. Mortgage insurance will handle death. If they lose their jobs the house will be sold and they would rent. Thank you.
reggie
What do you mean by mortgage insurance?

Just also want to be sure that while you may be helping them to live in an area they couldn’t normally afford on their own, are they being setup for potential financial failure in the future given the cost of living? Sometimes the intended “gift” ends up being a financial burden.
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reggiesimpson
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Re: Buying house with son

Post by reggiesimpson »

mortfree wrote: Sat Feb 09, 2019 2:01 am
reggiesimpson wrote: Fri Feb 08, 2019 10:29 pm
delamer wrote: Fri Feb 08, 2019 10:20 pm Your subject line is inaccurate. It should be “buying house with son and his girlfriend.”

Don’t do it.

Have you thought about what happens if one (or both) of them loses their job(s) and they can’t pay the mortgage or your son dies prematurely?

The “what if they split up” scenario is only one thing that can go wrong.
Yes his GF is involved but must sign an agreement that stipulates the house must be sold immediately if they split up before marriage. Mortgage insurance will handle death. If they lose their jobs the house will be sold and they would rent. Thank you.
reggie
What do you mean by mortgage insurance?

Just also want to be sure that while you may be helping them to live in an area they couldn’t normally afford on their own, are they being setup for potential financial failure in the future given the cost of living? Sometimes the intended “gift” ends up being a financial burden.
Well it certainly beats buying anything they couldn't afford and going broke. We all benefit from this arrangement. That's why I suggested it's catching on with Whites as it's been so common with other groups.
runner540
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Re: Buying house with son

Post by runner540 »

reggiesimpson wrote: Sat Feb 09, 2019 2:22 am
mortfree wrote: Sat Feb 09, 2019 2:01 am
reggiesimpson wrote: Fri Feb 08, 2019 10:29 pm
delamer wrote: Fri Feb 08, 2019 10:20 pm Your subject line is inaccurate. It should be “buying house with son and his girlfriend.”

Don’t do it.

Have you thought about what happens if one (or both) of them loses their job(s) and they can’t pay the mortgage or your son dies prematurely?

The “what if they split up” scenario is only one thing that can go wrong.
Yes his GF is involved but must sign an agreement that stipulates the house must be sold immediately if they split up before marriage. Mortgage insurance will handle death. If they lose their jobs the house will be sold and they would rent. Thank you.
reggie
What do you mean by mortgage insurance?

Just also want to be sure that while you may be helping them to live in an area they couldn’t normally afford on their own, are they being setup for potential financial failure in the future given the cost of living? Sometimes the intended “gift” ends up being a financial burden.
Well it certainly beats buying anything they couldn't afford and going broke. We all benefit from this arrangement. That's why I suggested it's catching on with Whites as it's been so common with other groups.
This kind of parental help is an arms race that is pushing house prices up beyond young families' incomes. Why does this couple "need" a house now that has 4 bedrooms, 3200 square feet and an acre of land in an expensive area with good school districts? If they get married tomorrow and have a child immediately, the earliest they need the school district is in 6 years - plenty of time for them to keep saving for a house they can afford.

It won't help them if you are pushing them to live beyond their means. Often high cost housing areas have other high costs and social expectations. Please check out the Millionaire Next Door's idea of "economic outpatient care".
Cigarman
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Re: Buying house with son [and his girlfriend]

Post by Cigarman »

I just want to be a fly on the wall for Thanksgiving dinner the first time after there is a major conflict, which there will be.
Rus In Urbe
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Re: Buying house with son [and his girlfriend]

Post by Rus In Urbe »

Well i have suggested to our son that at some point based on our age compared to her parents who are 8 and 9 yrs younger that they will probably move in and b taken care of when we pass.
Here's the nub of it: underlying this scheme is the fantasy that you and your wife will get elder care until you pass away, whereupon the parents of the girlfriend will then move into your space and get eldercare next. Is that the plan?

Make sure those expectations are on the table, and that your son and his girlfriend have fully signed on to take care of you as you die, along with their growing kids.

I am a big supporter of multi-generational housing. But the strings attached to this downpayment seem like extortion to me. And my SO and I are both on second marriages, so we've done the divorce thing and survived. And recovered. Amicable divorces. I doubt the divorce would have been so amicable if my In-Laws had been smack dab in the middle of it.

But, in the end, the OP is dead set on going ahead and has an answer for any piece of advice.

So------I sincerely hope it works out for all of you------Best of Luck!
I'd like to live as a poor man with lots of money. ~Pablo Picasso
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RickBoglehead
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Re: Buying house with son [and his girlfriend]

Post by RickBoglehead »

We have two grown children, one married in Florida, one unmarried with a long relationship in California. We have zero desire to ever consider living in the same house, even if the living quarters were totally separate, with either of them. They need to have their own lives, and we ours. We'll visit, and more frequently once we retire in two years, but never live in the same house. We also don't have plans to live in the same state.

As noted in a recent post, the OP is going to proceed regardless of what anyone posts. I've never understood why people ask for opinions when they aren't going to act differently regardless. This is so fraught with issues - who gets to deduct property taxes, can any owner force a sale, how does insurance work, what happens if son or girlfriend are sued, and lose in court, what happens if no one wants to buy the house when it has to be sold because of lost job, how do you compel someone to sell a house, the list goes on.

As to eldercare, my in-laws went from house to independent living (forced by health) to assisted living. If OP is thinking his son and girlfriend are going to provide eldercare, ask yourself the question - "Who is going to wipe my rear end for me when I can't?" It's pretty blunt, but I can tell you that neither of my in-laws wanted either of us, nor did we, helping them with personal care. Nor did they want a caregiver doing it, but they knew they could no longer do it themselves.

I hope it works out for the OP and his family, but I see potential disaster written all over this.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.
TheGreyingDuke
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Re: Buying house with son [and his girlfriend]

Post by TheGreyingDuke »

I would observe that these threads about financially assisting children buy a home seem to always elicit the same range of responses:

1) let them figure it out on their own, have them stand on their own two feet!

2) So much can go wrong, entering into arrangments that mix assets, are in the boundary between loans/gifts/inheritance are bound to be problematic.

3) Never mix family (or friends) and money.

These are all individual judgments/perceptions that might apply in any one's experience but are not universally relevant. To counteract the majority of commenters:

1) NONE of us stand on our own two feet, even orphans growing up in dire circumstance depend on the actions of others (who is at work providing the electricity I use at 2 AM on Christmas Day?). In the OP's case, he states that son and GF have been educated, have embarked on career paths, and indications are there that they are responsible and engaged. Seems they are well-planted on their feet!

Just as my parents regarded paying for my education their responsibility so my wife and I paid for the full education of our son. There are other ways to think of this, alternatives that frequently come down to "have them have skin in the game" as if going through a 10-year post-HS education is not enough skin!

2) Sure, lots can go wrong, just as walking across the street can go wrong. Having recently gifted our son and daughter-in-law cash to buy a home, I agree that gifting it can make things easier in some regards. In our case, I know that my daughter-in-law's mother is making pre-inheritance gifts to them as well.

my "kids" are both very successful in their fields (both tenured professors), have no need for the money and it is not funds that my wife and I need for our lives

3) That is a peculiar stance in my culture and experience. My brother-in-law suffered from chronic mental illness that required expensive acre over many decades. Without the help of family members needed treatment would not have been affordable for my in-laws. I understand that others have different experiences but would suggest that we keep in mind our own biases when we make statements that sound as if they came down from Mt Sinai.
"Every time I see an adult on a bicycle, I no longer despair for the future of the human race." H.G. Wells
jaydub71
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Re: Buying house with son [and his girlfriend]

Post by jaydub71 »

I think it is a wonderful gesture on your part even though there are a bunch of risks. Obviously a lot going on here but if you are going to do it, here are some thoughts/suggestions.

1) Write in the agreement that you have the option (not the obligation) to buy out the son and gf for the amount of equity they invested should they separate. You may find out that you don't want to sell the house immediately because it has gone up in value. In addition, if the house location is truly about the kids and if they have some, you might want your son to keep the house so the kids can stay in that school district.

2) Give them the ability to buy you out and/or gift them a portion of your ownership over time. Your goal is to give them a jump start. People keep quoting a 50% divorce rate. Let's also plan for the 50% scenario where they stay together.

3) If you have a separate apartment for the house, give the kids the ability to rent it on AirBNB when you aren't there. They can use those proceeds to help with their expenses or to pay you back for their investment. If you are worried about having a guaranteed place to stay on a moment's notice, then I think that is pretty telling about the relationship.

4) Treat you son's gf with love and respect as if she is your daughter. That will go along way to make this successful. (not saying you don't already do that)

5) This forum will come up with a 1000 possible scenarios both good and bad, mainly bad. The truth is what will actually play out will be something that was not presented by anyone.

I hope this turns out to be the wonderful blessing that you intend it be!
littlebird
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Re: Buying house with son [and his girlfriend]

Post by littlebird »

I know firsthand of two instances where extended family ownership by tenants-in-common resulted eventually in strangers to the arrangement owning a share of the house. I think the OP needs to explore his ownership options more closely.
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lthenderson
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Re: Buying house with son [and his girlfriend]

Post by lthenderson »

OP - After reading this thread, I can't find a single person who thinks this is a good idea. Are you really seeking advice or validation of a decision you've already made?

My advice is that you buy a house a rent it to your son until such time he can pay you back for it. But I don't expect that to change your mind as it is obviously made up.
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reggiesimpson
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Re: Buying house with son

Post by reggiesimpson »

JustinR wrote: Sat Feb 09, 2019 1:38 am
reggiesimpson wrote: Sat Feb 09, 2019 12:29 am Well i certainly understand those concerns but. The areas that have the better school systems (think grandchildren) are beyond their reach but not ours. So we help. If he could afford to do this comfortably on their own they may have gone for it but they cant and maybe they never will be able as the homes in solid school districts within job commute are astronomical. I took the long view with him when i first brought this up. Not just the money to help purchase and maintain a home but the presence of grandparents ( hers live nearby) to help taking care of future grandchildren as one example of an asset thats non financial. As i mentioned earlier Asian, Hispanic and Black cultures have always embraced multigenerational living as the norm and its only recently that Whites are seeing the wisdom along with changing town zoning laws. It is reducing the stress on nursing homes and day care centers. Im 71 and my wife is 68. Her parents are 60 and 64. None of us are dead, divorced or disabled. We cant think of anything more fulfilling than doing what we are proposing. Thank you
reggie
reggiesimpson wrote: Fri Feb 08, 2019 11:31 pm I may have explained much of what you commented on in recent posts. Interestingly from my readings and from calling various town clerks offices and real estate agencies more and more couples and parents are looking for in law apts with their home purchases. Towns are amending their zoning bylaws to accommodate this demand. The reason is simple. The parents have the money and the children dont and the need to take care of grandchildren and eventually grandparents is a pressing issue that is being resolved with multigenerational living. While its been popular with Hispanic, Black and Asian communities for years it has been catching on with Whites over the past 20 years. So what i am bringing up is the wave of the present, past and future living in America. Thank you.
reggie
The issue isn't "multigenerational living." It's everyone owning the house.

I doubt in "Hispanic, Black, and Asian communities" that everyone in the family owns the house.

It's more common that the parents own it and the kids live in it, and then it's passed on when they die. So what you're trying to do has nothing in common with that.
Good morning. I disagree. We are talking about multigenerational living in 2019. The family in this day and age is spread out all over the country and the world. Our son lives 5 hrs away in another state and driving there and staying in a hotel is getting lame. Further, many older parents like us are sitting in a too big, two person home that will never be utilized by their children. So the next logical step is to help our children buy a home with the eye to having a place to stay when we visit. We are not moving in as we have a daughter in our home state. Thank you.
reggie
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reggiesimpson
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Re: Buying house with son

Post by reggiesimpson »

runner540 wrote: Sat Feb 09, 2019 8:57 am
reggiesimpson wrote: Sat Feb 09, 2019 2:22 am
mortfree wrote: Sat Feb 09, 2019 2:01 am
reggiesimpson wrote: Fri Feb 08, 2019 10:29 pm
delamer wrote: Fri Feb 08, 2019 10:20 pm Your subject line is inaccurate. It should be “buying house with son and his girlfriend.”

Don’t do it.

Have you thought about what happens if one (or both) of them loses their job(s) and they can’t pay the mortgage or your son dies prematurely?

The “what if they split up” scenario is only one thing that can go wrong.
Yes his GF is involved but must sign an agreement that stipulates the house must be sold immediately if they split up before marriage. Mortgage insurance will handle death. If they lose their jobs the house will be sold and they would rent. Thank you.
reggie
What do you mean by mortgage insurance?

Just also want to be sure that while you may be helping them to live in an area they couldn’t normally afford on their own, are they being setup for potential financial failure in the future given the cost of living? Sometimes the intended “gift” ends up being a financial burden.
Well it certainly beats buying anything they couldn't afford and going broke. We all benefit from this arrangement. That's why I suggested it's catching on with Whites as it's been so common with other groups.
This kind of parental help is an arms race that is pushing house prices up beyond young families' incomes. Why does this couple "need" a house now that has 4 bedrooms, 3200 square feet and an acre of land in an expensive area with good school districts? If they get married tomorrow and have a child immediately, the earliest they need the school district is in 6 years - plenty of time for them to keep saving for a house they can afford.

It won't help them if you are pushing them to live beyond their means. Often high cost housing areas have other high costs and social expectations. Please check out the Millionaire Next Door's idea of "economic outpatient care".
I couldnt agree more with the timing. When i initially thought of this and brought it up i had no idea they would move on it so fast. They told me that they had been thinking of making a move but were unable to do it once they found out the cost of real estate in the area. We stepped into the breech so to speak. I am 71 and DW is 68. So for multiple reasons the timing works for us also. We want to downsize, stay in our home state, snowbird but spend a little more time visiting our son and gf. We will make the same offer to our daughter when the time comes. My son and gf have solid careers but the housing costs are overwhelming.
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reggiesimpson
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Re: Buying house with son [and his girlfriend]

Post by reggiesimpson »

Cigarman wrote: Sat Feb 09, 2019 9:07 am I just want to be a fly on the wall for Thanksgiving dinner the first time after there is a major conflict, which there will be.
Agreed. The four of us are under no illusions. Problems will arise. They already have. So what else is new. The big picture is far more important than the occasional disruption and fortunately that is in the forefront. And we can always get up and leave as we are visiting not living there.
crz1
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Re: Buying house with son [and his girlfriend]

Post by crz1 »

I suggest parents buy the house then rent to son. Parents are landlord, take depreciation, then pass to son as inheritance, step up basis, no need to pay tax.
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reggiesimpson
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Re: Buying house with son [and his girlfriend]

Post by reggiesimpson »

Rus In Urbe wrote: Sat Feb 09, 2019 9:11 am
Well i have suggested to our son that at some point based on our age compared to her parents who are 8 and 9 yrs younger that they will probably move in and b taken care of when we pass.
Here's the nub of it: underlying this scheme is the fantasy that you and your wife will get elder care until you pass away, whereupon the parents of the girlfriend will then move into your space and get eldercare next. Is that the plan?

Make sure those expectations are on the table, and that your son and his girlfriend have fully signed on to take care of you as you die, along with their growing kids.

I am a big supporter of multi-generational housing. But the strings attached to this downpayment seem like extortion to me. And my SO and I are both on second marriages, so we've done the divorce thing and survived. And recovered. Amicable divorces. I doubt the divorce would have been so amicable if my In-Laws had been smack dab in the middle of it.

But, in the end, the OP is dead set on going ahead and has an answer for any piece of advice.

So------I sincerely hope it works out for all of you------Best of Luck!
I explained to my son and gf that the long term benefits of multigenerational living can far outweigh the negatives. As she has experienced this it was common sense for her. One benefit is taking care of the elderly. Thats only one of the many reasons town building depts are adjusting their zoning bylaws to allow family to live under the same roof in apartments. It also relieves the stress on nursing homes. Are we ourselves demanding that our children take care of us? No of course not. My father passed quickly while my mother lived with us for a year before she had to go to a nursing home. Thats reality. Also, the grandchildren will grow and may want to use that space themselves if available. Even our own children may move in there and allow/rent etc the rest of the house to a child. It opens the door to many possibilities. Further, we are not doing this to extort anything other than the opportunity to spend a little more time with our son ,gf and future grandchildren. But protecting this contribution is a reality that responsible adults need to take in to consideration. And we have. Lastly, of course we have thought this out and done our homework but we are not dead set on anything. I came to BH for their advice and i am sitting here with a legal pad and pencil taking notes based on that BH advice. Thank you.
reggie
letsgobobby
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Re: Buying house with son [and his girlfriend]

Post by letsgobobby »

reggiesimpson wrote: Fri Feb 08, 2019 7:56 pm My wife and i plan on buying a home with our son and his girlfriend in the near future. We will contribute 50% of the sale price to the purchase and my son and GF will come up with the other half via their assets and mortgage combo. We plan on contributing the 50% and not making it a gift or a loan. The stipulation is that our name goes on the title as 50% owner and there be an in law apartment so when we visit ( he is out of state) we have a place to stay instead of airbnb and hotels. I would appreciate BH learned comments on the matter. Thank you.
reggie
reggie, I believe this is a bad idea. Just give your son the money and let him do with it what he wants. Hopefully your relationship is such that he will happily have him stay with you when you visit. You shouldn’t have to pay him for that privilege.
mmcmonster
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Re: Buying house with son

Post by mmcmonster »

reggiesimpson wrote: Fri Feb 08, 2019 10:29 pmYes his GF is involved but must sign an agreement that stipulates the house must be sold immediately if they split up before marriage. Mortgage insurance will handle death. If they lose their jobs the house will be sold and they would rent. Thank you.
reggie
Some people just split up for a couple weeks and get back together. Putting the house on the market immediately is going to ensure that they never get back together. (Is that your plan?)

How about: Gift the money to your son and have your son be 75% owner and the girlfriend 25% owner.

If they break up, let them figure out what to do with the house. It's quite possible one of them would agree to buy out the other. Or live together in the house (temporarily) without being BF/GF. Or a million other possibilities (none of which are your business).
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reggiesimpson
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Re: Buying house with son [and his girlfriend]

Post by reggiesimpson »

RickBoglehead wrote: Sat Feb 09, 2019 9:31 am We have two grown children, one married in Florida, one unmarried with a long relationship in California. We have zero desire to ever consider living in the same house, even if the living quarters were totally separate, with either of them. They need to have their own lives, and we ours. We'll visit, and more frequently once we retire in two years, but never live in the same house. We also don't have plans to live in the same state.

As noted in a recent post, the OP is going to proceed regardless of what anyone posts. I've never understood why people ask for opinions when they aren't going to act differently regardless. This is so fraught with issues - who gets to deduct property taxes, can any owner force a sale, how does insurance work, what happens if son or girlfriend are sued, and lose in court, what happens if no one wants to buy the house when it has to be sold because of lost job, how do you compel someone to sell a house, the list goes on.

As to eldercare, my in-laws went from house to independent living (forced by health) to assisted living. If OP is thinking his son and girlfriend are going to provide eldercare, ask yourself the question - "Who is going to wipe my rear end for me when I can't?" It's pretty blunt, but I can tell you that neither of my in-laws wanted either of us, nor did we, helping them with personal care. Nor did they want a caregiver doing it, but they knew they could no longer do it themselves.

I hope it works out for the OP and his family, but I see potential disaster written all over this.
A recent study asked the question of the newly retired "How many of you want to live near your children and how many do not?" 50% did and 50% did not. You are in the did nots and we are in the dids. Its literally that simple. I came to BH to get advice and am taking notes based on that advice. Just because i havent changed my mind to follow the major consensus of what we are doing is fraught with "disaster" should indicate to at least some that we have done our homework (readings, atty advice, discussions with our son and gf and many friends). BH is another avenue for additional advice. Thats all. I must say that i am rather dismayed at the lack of social glue that has been displayed. We are talking about family here. Thank you.
reggie
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David Jay
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Re: Buying house with son

Post by David Jay »

reggiesimpson wrote: Sat Feb 09, 2019 1:04 am...but i to am optimistic...
reggie.
Yes, yes you are.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
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reggiesimpson
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Re: Buying house with son [and his girlfriend]

Post by reggiesimpson »

TheGreyingDuke wrote: Sat Feb 09, 2019 9:35 am I would observe that these threads about financially assisting children buy a home seem to always elicit the same range of responses:

1) let them figure it out on their own, have them stand on their own two feet!

2) So much can go wrong, entering into arrangments that mix assets, are in the boundary between loans/gifts/inheritance are bound to be problematic.

3) Never mix family (or friends) and money.

These are all individual judgments/perceptions that might apply in any one's experience but are not universally relevant. To counteract the majority of commenters:

1) NONE of us stand on our own two feet, even orphans growing up in dire circumstance depend on the actions of others (who is at work providing the electricity I use at 2 AM on Christmas Day?). In the OP's case, he states that son and GF have been educated, have embarked on career paths, and indications are there that they are responsible and engaged. Seems they are well-planted on their feet!

Just as my parents regarded paying for my education their responsibility so my wife and I paid for the full education of our son. There are other ways to think of this, alternatives that frequently come down to "have them have skin in the game" as if going through a 10-year post-HS education is not enough skin!

2) Sure, lots can go wrong, just as walking across the street can go wrong. Having recently gifted our son and daughter-in-law cash to buy a home, I agree that gifting it can make things easier in some regards. In our case, I know that my daughter-in-law's mother is making pre-inheritance gifts to them as well.

my "kids" are both very successful in their fields (both tenured professors), have no need for the money and it is not funds that my wife and I need for our lives

3) That is a peculiar stance in my culture and experience. My brother-in-law suffered from chronic mental illness that required expensive acre over many decades. Without the help of family members needed treatment would not have been affordable for my in-laws. I understand that others have different experiences but would suggest that we keep in mind our own biases when we make statements that sound as if they came down from Mt Sinai.
Thank you Greying Duke. As i just posted. A recent study asked the question of the newly retired "How many of you want to live near your children and how many do not?" 50% did and 50% did not. We are in the dids column. That we are helping our children buy a house and have a space to visit in privacy and protect that contribution has elicited some interesting responses. On the whole they are negative. I have to wonder how far we have strayed as a culture from the concept of helping family when its treated like a criminal act. Thank you.
reggie
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Re: Buying house with son [and his girlfriend]

Post by reggiesimpson »

jaydub71 wrote: Sat Feb 09, 2019 9:50 am I think it is a wonderful gesture on your part even though there are a bunch of risks. Obviously a lot going on here but if you are going to do it, here are some thoughts/suggestions.

1) Write in the agreement that you have the option (not the obligation) to buy out the son and gf for the amount of equity they invested should they separate. You may find out that you don't want to sell the house immediately because it has gone up in value. In addition, if the house location is truly about the kids and if they have some, you might want your son to keep the house so the kids can stay in that school district.

2) Give them the ability to buy you out and/or gift them a portion of your ownership over time. Your goal is to give them a jump start. People keep quoting a 50% divorce rate. Let's also plan for the 50% scenario where they stay together.

3) If you have a separate apartment for the house, give the kids the ability to rent it on AirBNB when you aren't there. They can use those proceeds to help with their expenses or to pay you back for their investment. If you are worried about having a guaranteed place to stay on a moment's notice, then I think that is pretty telling about the relationship.

4) Treat you son's gf with love and respect as if she is your daughter. That will go along way to make this successful. (not saying you don't already do that)

5) This forum will come up with a 1000 possible scenarios both good and bad, mainly bad. The truth is what will actually play out will be something that was not presented by anyone.

I hope this turns out to be the wonderful blessing that you intend it be!
Thank you for the sage advice. I will follow up. Its exactly what i expect from BH. Thank you.
reggie.
k1mccardell
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Re: Buying house with son [and his girlfriend]

Post by k1mccardell »

Hey Reggie - this has been a very interesting post. Your children sound successful, responsible and close to their families emotionally. The fact that you want to entertain this endeavor together speaks volumes about your relationship among the 4 of you. Therefore, I recommend go for it. Regardless of what happens in the future. I'm reminded of ancient people, recent immigrants, extended families across the globe who benefit from the closeness, warmth and ease of being together.

We laud and applaud successful 2nd, 3rd and 4th generation family businesses. They are benchmarks/milestones we admire. They had to start somewhere as a family enterprise - it's all about trust. Trust your gut on this one and enjoy what comes.
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Re: Buying house with son [and his girlfriend]

Post by reggiesimpson »

littlebird wrote: Sat Feb 09, 2019 9:52 am I know firsthand of two instances where extended family ownership by tenants-in-common resulted eventually in strangers to the arrangement owning a share of the house. I think the OP needs to explore his ownership options more closely.
I have discussed this with two attys and they both recommended Tenants in Common. I am still seeking legal advice. Thank you.
reggie.
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Re: Buying house with son [and his girlfriend]

Post by reggiesimpson »

novillero wrote: Sat Feb 09, 2019 9:54 am If you thought it was a good idea, you wouldn’t have asked strangers for their opinion.
I respect BH opinions. Thats why i am here. Thank you.
'reggie.
runner540
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Re: Buying house with son [and his girlfriend]

Post by runner540 »

reggiesimpson wrote: Sat Feb 09, 2019 11:19 am
TheGreyingDuke wrote: Sat Feb 09, 2019 9:35 am I would observe that these threads about financially assisting children buy a home seem to always elicit the same range of responses:

1) let them figure it out on their own, have them stand on their own two feet!

2) So much can go wrong, entering into arrangments that mix assets, are in the boundary between loans/gifts/inheritance are bound to be problematic.

3) Never mix family (or friends) and money.

These are all individual judgments/perceptions that might apply in any one's experience but are not universally relevant. To counteract the majority of commenters:

1) NONE of us stand on our own two feet, even orphans growing up in dire circumstance depend on the actions of others (who is at work providing the electricity I use at 2 AM on Christmas Day?). In the OP's case, he states that son and GF have been educated, have embarked on career paths, and indications are there that they are responsible and engaged. Seems they are well-planted on their feet!

Just as my parents regarded paying for my education their responsibility so my wife and I paid for the full education of our son. There are other ways to think of this, alternatives that frequently come down to "have them have skin in the game" as if going through a 10-year post-HS education is not enough skin!

2) Sure, lots can go wrong, just as walking across the street can go wrong. Having recently gifted our son and daughter-in-law cash to buy a home, I agree that gifting it can make things easier in some regards. In our case, I know that my daughter-in-law's mother is making pre-inheritance gifts to them as well.

my "kids" are both very successful in their fields (both tenured professors), have no need for the money and it is not funds that my wife and I need for our lives

3) That is a peculiar stance in my culture and experience. My brother-in-law suffered from chronic mental illness that required expensive acre over many decades. Without the help of family members needed treatment would not have been affordable for my in-laws. I understand that others have different experiences but would suggest that we keep in mind our own biases when we make statements that sound as if they came down from Mt Sinai.
Thank you Greying Duke. As i just posted. A recent study asked the question of the newly retired "How many of you want to live near your children and how many do not?" 50% did and 50% did not. We are in the dids column. That we are helping our children buy a house and have a space to visit in privacy and protect that contribution has elicited some interesting responses. On the whole they are negative. I have to wonder how far we have strayed as a culture from the concept of helping family when its treated like a criminal act. Thank you.
reggie
No one has said it's a criminal act. What people are reacting to is that you have A LOT of expectations around this "help"/"gift".
You've said it's:
-early inheritance and money you don't need BUT you want to retain upside/control via ownership
-payment for future lodging and eldercare
-equity (and upside) in the home without for all the carrying costs
-for son, Gf and future grandkids BUT protected from GF/DIL

The same dollars can't meet all these expectations and someone will be disappointed to say the least.
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Re: Buying house with son [and his girlfriend]

Post by reggiesimpson »

lthenderson wrote: Sat Feb 09, 2019 10:05 am OP - After reading this thread, I can't find a single person who thinks this is a good idea. Are you really seeking advice or validation of a decision you've already made?

My advice is that you buy a house a rent it to your son until such time he can pay you back for it. But I don't expect that to change your mind as it is obviously made up.
I am looking for further advice from BH because i respect this forum. Otherwise i wouldnt have stayed up til 2 am last night responding. Renting means he and his gf have no skin in the game. They will end up resenting us. Not exactly the relationship we want. Thank you.
reggie
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Re: Buying house with son [and his girlfriend]

Post by bayview »

50% want to live NEAR their adult children.

That is not even remotely the same as under the same roof.

I agree with the idea of gifting him the money, he has 75% and she has 25%, and you stay with them when you visit.

If the time comes that you want to move there, I would think that a great guest cottage (in law dwelling) could be built on that 1+ acre, if as you say towns are changing zoning ordinances.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri
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Re: Buying house with son [and his girlfriend]

Post by reggiesimpson »

crz1 wrote: Sat Feb 09, 2019 10:55 am I suggest parents buy the house then rent to son. Parents are landlord, take depreciation, then pass to son as inheritance, step up basis, no need to pay tax.
Without their having skin in the game (they are also putting down cash) renting has its own set of issues. Thank you.
reggie
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Re: Buying house with son [and his girlfriend]

Post by Jags4186 »

There are just two much better options.

1) gift them the money
2) buy the house, let them “rent to own”

You don’t want to do 1) because you want control. You don’t want to do 2) because they aren’t beholden to you (no “skin in the game”)

So you’ve developed an incredibly subprime way of accomplishing your goal.

That’s the pushback you’re getting.

Here’s a suggestion. Show your son and the girlfriend this thread and see what they think. Maybe they haven’t thought about all this.
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Re: Buying house with son

Post by reggiesimpson »

Flyer24 wrote: Sat Feb 09, 2019 10:52 am
reggiesimpson wrote: Sat Feb 09, 2019 10:24 am
JustinR wrote: Sat Feb 09, 2019 1:38 am
reggiesimpson wrote: Sat Feb 09, 2019 12:29 am Well i certainly understand those concerns but. The areas that have the better school systems (think grandchildren) are beyond their reach but not ours. So we help. If he could afford to do this comfortably on their own they may have gone for it but they cant and maybe they never will be able as the homes in solid school districts within job commute are astronomical. I took the long view with him when i first brought this up. Not just the money to help purchase and maintain a home but the presence of grandparents ( hers live nearby) to help taking care of future grandchildren as one example of an asset thats non financial. As i mentioned earlier Asian, Hispanic and Black cultures have always embraced multigenerational living as the norm and its only recently that Whites are seeing the wisdom along with changing town zoning laws. It is reducing the stress on nursing homes and day care centers. Im 71 and my wife is 68. Her parents are 60 and 64. None of us are dead, divorced or disabled. We cant think of anything more fulfilling than doing what we are proposing. Thank you
reggie
reggiesimpson wrote: Fri Feb 08, 2019 11:31 pm I may have explained much of what you commented on in recent posts. Interestingly from my readings and from calling various town clerks offices and real estate agencies more and more couples and parents are looking for in law apts with their home purchases. Towns are amending their zoning bylaws to accommodate this demand. The reason is simple. The parents have the money and the children dont and the need to take care of grandchildren and eventually grandparents is a pressing issue that is being resolved with multigenerational living. While its been popular with Hispanic, Black and Asian communities for years it has been catching on with Whites over the past 20 years. So what i am bringing up is the wave of the present, past and future living in America. Thank you.
reggie
The issue isn't "multigenerational living." It's everyone owning the house.

I doubt in "Hispanic, Black, and Asian communities" that everyone in the family owns the house.

It's more common that the parents own it and the kids live in it, and then it's passed on when they die. So what you're trying to do has nothing in common with that.
Good morning. I disagree. We are talking about multigenerational living in 2019. The family in this day and age is spread out all over the country and the world. Our son lives 5 hrs away in another state and driving there and staying in a hotel is getting lame. Further, many older parents like us are sitting in a too big, two person home that will never be utilized by their children. So the next logical step is to help our children buy a home with the eye to having a place to stay when we visit. We are not moving in as we have a daughter in our home state. Thank you.
reggie
What is the point that you started this thread? It doesn’t seem like you want to listen to why people think it is bad. You keep countering with why you are going to do it. It doesn’t seem like you are looking for guidance on this decision but already have your mind made up.
As i stated repeatedly. I am looking for BH advice. I didnt come here completely ignorant with a Tabula Raza mentality. Just because i have countered almost every argument that finds fault with this concept doesnt mean i dont want to listen or that i havent sought other advice and thought through this entire process. I have taken many notes on the advice given hear and will act on it. Thank you.
reggie
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Re: Buying house with son [and his girlfriend]

Post by reggiesimpson »

letsgobobby wrote: Sat Feb 09, 2019 10:59 am
reggiesimpson wrote: Fri Feb 08, 2019 7:56 pm My wife and i plan on buying a home with our son and his girlfriend in the near future. We will contribute 50% of the sale price to the purchase and my son and GF will come up with the other half via their assets and mortgage combo. We plan on contributing the 50% and not making it a gift or a loan. The stipulation is that our name goes on the title as 50% owner and there be an in law apartment so when we visit ( he is out of state) we have a place to stay instead of airbnb and hotels. I would appreciate BH learned comments on the matter. Thank you.
reggie
reggie, I believe this is a bad idea. Just give your son the money and let him do with it what he wants. Hopefully your relationship is such that he will happily have him stay with you when you visit. You shouldn’t have to pay him for that privilege.
I have already suggested doing this and they both want to go ahead with our contribution.
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Re: Buying house with son [and his girlfriend]

Post by bayview »

bayview wrote: Sat Feb 09, 2019 11:33 am 50% want to live NEAR their adult children.

That is not even remotely the same as under the same roof.

I agree with the idea of gifting him the money, he has 75% and she has 25%, and you stay with them when you visit.

If the time comes that you want to move there, I would think that a great guest cottage (in law dwelling) could be built on that 1+ acre, if as you say towns are changing zoning ordinances.
—one more thought: bringing significant amounts of money into a familial relationship makes things weird.

Money and power tend to be linked, and unless someone is a complete saint, the presence of this financial entanglement is going to affect what should be a relaxed and affectionate relationship between the generations.

If you have a good relationship now, this setup could injure it. And if the relationship is currently not so good, to where you think you must have partial ownership to be allowed to visit or eventually live with them, this deal sure won’t help.

Edit to add: what does your wife think? Is she reading this thread? She seems singularly absent from the discussion.
Last edited by bayview on Sat Feb 09, 2019 11:46 am, edited 1 time in total.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri
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Re: Buying house with son

Post by ThatGuy »

reggiesimpson wrote: Sat Feb 09, 2019 11:40 amAs i stated repeatedly. I am looking for BH advice. I didnt come here completely ignorant with a Tabula Raza mentality. Just because i have countered almost every argument that finds fault with this concept doesnt mean i dont want to listen or that i havent sought other advice and thought through this entire process. I have taken many notes on the advice given hear and will act on it. Thank you.
reggie
Can you give an example of a piece of advice within this thread that has changed your thinking? Because from what I've read, you're ignoring the excellent points brought up by several posters.

I get it, no one likes their brilliant idea shot down by others. Lord knows I've gotten overly defensive in discussions. But this conversation would be much more informative if it felt more like a two-way sharing of thoughts.
Work is the curse of the drinking class - Oscar Wilde
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Re: Buying house with son [and his girlfriend]

Post by jaydub71 »

Jags4186 wrote: Sat Feb 09, 2019 11:36 am There are just two much better options.

1) gift them the money
2) buy the house, let them “rent to own”

You don’t want to do 1) because you want control. You don’t want to do 2) because they aren’t beholden to you (no “skin in the game”)

So you’ve developed an incredibly subprime way of accomplishing your goal.

That’s the pushback you’re getting.

Here’s a suggestion. Show your son and the girlfriend this thread and see what they think. Maybe they haven’t thought about all this.
Rent to own is an interesting idea that I think you should investigate further.
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Re: Buying house with son

Post by reggiesimpson »

mmcmonster wrote: Sat Feb 09, 2019 11:06 am
reggiesimpson wrote: Fri Feb 08, 2019 10:29 pmYes his GF is involved but must sign an agreement that stipulates the house must be sold immediately if they split up before marriage. Mortgage insurance will handle death. If they lose their jobs the house will be sold and they would rent. Thank you.
reggie
Some people just split up for a couple weeks and get back together. Putting the house on the market immediately is going to ensure that they never get back together. (Is that your plan?)

How about: Gift the money to your son and have your son be 75% owner and the girlfriend 25% owner.

If they break up, let them figure out what to do with the house. It's quite possible one of them would agree to buy out the other. Or live together in the house (temporarily) without being BF/GF. Or a million other possibilities (none of which are your business).
The written agreement to sell the house in the case of an early break up was the Real Estate attys idea not mine. Gifting and loaning are off the table for asset exposure reasons. They both understand this. We have nothing to do with their future marital issues. Thats on them alone. Also clearly stated. Thank you.
reggie
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Re: Buying house with son [and his girlfriend]

Post by reggiesimpson »

k1mccardell wrote: Sat Feb 09, 2019 11:23 am Hey Reggie - this has been a very interesting post. Your children sound successful, responsible and close to their families emotionally. The fact that you want to entertain this endeavor together speaks volumes about your relationship among the 4 of you. Therefore, I recommend go for it. Regardless of what happens in the future. I'm reminded of ancient people, recent immigrants, extended families across the globe who benefit from the closeness, warmth and ease of being together.

We laud and applaud successful 2nd, 3rd and 4th generation family businesses. They are benchmarks/milestones we admire. They had to start somewhere as a family enterprise - it's all about trust. Trust your gut on this one and enjoy what comes.
Thank you. I sincerely appreciate the vote of confidence. My wife and i have discussed this at length and we keep coming back to the same conclusions. Help our children the best way we can. This is the best way we can in our minds and they agree.
Thank you
reggie.
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Re: Buying house with son [and his girlfriend]

Post by robphoto »

For me, the big problem is, they're not married!

They haven't permanently committed to each other; why would you fund a situation that only works if they eventually get engaged, marry, and don't divorce?

Working within the resources that you have is important for building the marriage partnership; I've seen situations where the financial support by parents seemed to both get the couple into higher mortgage, etc. than they should have, and make separating easier!

Even though your name isn't on the mortgage, if they don't keep up with it you're going to be looking at losing your investment; you may end up paying just to not lose the house. In that way it's very similar to the question, "Should I co-sign for my kid's car loan?" (answer: never)
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Re: Buying house with son [and his girlfriend]

Post by reggiesimpson »

bayview wrote: Sat Feb 09, 2019 11:33 am 50% want to live NEAR their adult children.

That is not even remotely the same as under the same roof.

I agree with the idea of gifting him the money, he has 75% and she has 25%, and you stay with them when you visit.

If the time comes that you want to move there, I would think that a great guest cottage (in law dwelling) could be built on that 1+ acre, if as you say towns are changing zoning ordinances.
Again, we are not living there we are visiting there. Our home is in another state as is our daughter. Gifting doesnt resolve asset protection while a contribution/ partial ownership does.
Livable guest cottages are illegal imany if not all of the towns anywhere near the city as the zoning boards fear illegal renting. We already went through that grief. Thank you.
reggie.
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Re: Buying house with son [and his girlfriend]

Post by EnjoyIt »

Reggie,
I wish you and your family all the best in this decision. On paper it all looks like a pretty good idea, but statistically the odds of this plan going well is very poor. It is just a fact as there are so many things that can go wrong with a high chance of failure when adding them all up. I hope you reconsider this decision for everyone’s sake, but if you are still going ahead, once again I wish you the best and that everything works out as planned.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
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Re: Buying house with son [and his girlfriend]

Post by reggiesimpson »

Jags4186 wrote: Sat Feb 09, 2019 11:36 am There are just two much better options.

1) gift them the money
2) buy the house, let them “rent to own”

You don’t want to do 1) because you want control. You don’t want to do 2) because they aren’t beholden to you (no “skin in the game”)

So you’ve developed an incredibly subprime way of accomplishing your goal.

That’s the pushback you’re getting.

Here’s a suggestion. Show your son and the girlfriend this thread and see what they think. Maybe they haven’t thought about all this.
We wont gift the money because we do not want to risk its loss to litigation, divorce etc. Its inheritance money and it will stay that way. If you want to call that "control" so be it. I would expect her parents to do exactly the same thing if things were reversed and i would certainly understand that. Its amazing to me that so many BH dont or wont admit it. And since when do any renters have skin in the game.....meaning ownership. I was once a landlord and understand that. Thats why renting doesnt work. I have aleready stated many times that these discussions have already been stated with the 4 of us. There are no surprises left. The only surprise is the apparent lack of concern for our view of what we call "family". That would surely shock them if they read this thread. Thank you.
reggie
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Re: Buying house with son [and his girlfriend]

Post by reggiesimpson »

bayview wrote: Sat Feb 09, 2019 11:44 am
bayview wrote: Sat Feb 09, 2019 11:33 am 50% want to live NEAR their adult children.

That is not even remotely the same as under the same roof.

I agree with the idea of gifting him the money, he has 75% and she has 25%, and you stay with them when you visit.

If the time comes that you want to move there, I would think that a great guest cottage (in law dwelling) could be built on that 1+ acre, if as you say towns are changing zoning ordinances.
—one more thought: bringing significant amounts of money into a familial relationship makes things weird.

Money and power tend to be linked, and unless someone is a complete saint, the presence of this financial entanglement is going to affect what should be a relaxed and affectionate relationship between the generations.

If you have a good relationship now, this setup could injure it. And if the relationship is currently not so good, to where you think you must have partial ownership to be allowed to visit or eventually live with them, this deal sure won’t help.

Edit to add: what does your wife think? Is she reading this thread? She seems singularly absent from the discussion.
I answered the first part of this post a little while ago. To continue.We are bringing 50% into the purchase of a house with some monthly "rent" to defray some costs. Not exactly big dollars. He is putting significant dollars in himself. The relationship is fine but of course issue can and will come up. We will have to be open to resolving them just like responsible adults......then we will take another cruise.... lol. I discussed this thread with my wife this morning and suggested she read it BUT be ready for some vitriol (not you). Thank you.
reggie
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Re: Buying house with son [and his girlfriend]

Post by nasrullah »

reggiesimpson wrote: Fri Feb 08, 2019 7:56 pm My wife and i plan on buying a home with our son and his girlfriend in the near future. We will contribute 50% of the sale price to the purchase and my son and GF will come up with the other half via their assets and mortgage combo. We plan on contributing the 50% and not making it a gift or a loan. The stipulation is that our name goes on the title as 50% owner and there be an in law apartment so when we visit ( he is out of state) we have a place to stay instead of airbnb and hotels. I would appreciate BH learned comments on the matter. Thank you.
reggie
Did something similar with my father. Do not do this. Period.

We haven’t spoken in over a decade.
Doing nothing is doing something.
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Re: Buying house with son [and his girlfriend]

Post by reggiesimpson »

runner540 wrote: Sat Feb 09, 2019 11:28 am
reggiesimpson wrote: Sat Feb 09, 2019 11:19 am
TheGreyingDuke wrote: Sat Feb 09, 2019 9:35 am I would observe that these threads about financially assisting children buy a home seem to always elicit the same range of responses:

1) let them figure it out on their own, have them stand on their own two feet!

2) So much can go wrong, entering into arrangments that mix assets, are in the boundary between loans/gifts/inheritance are bound to be problematic.

3) Never mix family (or friends) and money.

These are all individual judgments/perceptions that might apply in any one's experience but are not universally relevant. To counteract the majority of commenters:

1) NONE of us stand on our own two feet, even orphans growing up in dire circumstance depend on the actions of others (who is at work providing the electricity I use at 2 AM on Christmas Day?). In the OP's case, he states that son and GF have been educated, have embarked on career paths, and indications are there that they are responsible and engaged. Seems they are well-planted on their feet!

Just as my parents regarded paying for my education their responsibility so my wife and I paid for the full education of our son. There are other ways to think of this, alternatives that frequently come down to "have them have skin in the game" as if going through a 10-year post-HS education is not enough skin!

2) Sure, lots can go wrong, just as walking across the street can go wrong. Having recently gifted our son and daughter-in-law cash to buy a home, I agree that gifting it can make things easier in some regards. In our case, I know that my daughter-in-law's mother is making pre-inheritance gifts to them as well.

my "kids" are both very successful in their fields (both tenured professors), have no need for the money and it is not funds that my wife and I need for our lives

3) That is a peculiar stance in my culture and experience. My brother-in-law suffered from chronic mental illness that required expensive acre over many decades. Without the help of family members needed treatment would not have been affordable for my in-laws. I understand that others have different experiences but would suggest that we keep in mind our own biases when we make statements that sound as if they came down from Mt Sinai.
Thank you Greying Duke. As i just posted. A recent study asked the question of the newly retired "How many of you want to live near your children and how many do not?" 50% did and 50% did not. We are in the dids column. That we are helping our children buy a house and have a space to visit in privacy and protect that contribution has elicited some interesting responses. On the whole they are negative. I have to wonder how far we have strayed as a culture from the concept of helping family when its treated like a criminal act. Thank you.
reggie
No one has said it's a criminal act. What people are reacting to is that you have A LOT of expectations around this "help"/"gift".
You've said it's:
-early inheritance and money you don't need BUT you want to retain upside/control via ownership
-payment for future lodging and eldercare
-equity (and upside) in the home without for all the carrying costs
-for son, Gf and future grandkids BUT protected from GF/DIL

The same dollars can't meet all these expectations and someone will be disappointed to say the least.
Yes i have. Ive already been accused of extortion. A criminal act. Our expectations is a place to stay when we visit that means not a hotel/airbnb/apt etc.
Control of my sons inheritance was something he is very grateful for. He agrees whole heartedly. No one is paying for future lodging and eldercare. That will be resolved when the time comes and the conditions dictates. Our equity is 50% because thats what we are contributing and further helping out with a "rent" to help defray costs like our utility use. And again if his gf parents offered my son the same deal i wouldnt expect them to settle for anything less than we are suggesting. Thank you.
reggie
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HueyLD
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Re: Buying house with son [and his girlfriend]

Post by HueyLD »

What would you do if the girlfriend sold her 1/4 ownership to an old boyfriend or her mother? That's what tenants in common means.
Luckywon
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Re: Buying house with son [and his girlfriend]

Post by Luckywon »

I have not read this thread in detail so I apologize if anything that I say his redundant.

I was once conservator and then executor for a relative who had property in another state. Even though the property was not worth much, it created a nightmare administration wise. As conservator, I had to deal with probate court issues in two states instead of one.

After the relative died, I discovered the state in which the property was in had different estate and inheritance laws, which necessitated spending a small fortune in time and money hiring a lawyer to address these, including completing a federal estate return, which would not have been necessary under the laws of the state that he actually lived in. Trust me, a federal estate tax return is something you never went to put someone through. I'd die before i did that. 🤡

So as part of your diligence look into the details of how this would affect distribution of your estate. Perhaps there will be no big issue. It depends on the states involved.

I can think of probably 25 other reasons why this would be a bad or very bad idea ( I literally smacked my forehead after I read the first few lines of your post) but will not list these because they are mostly obvious and probably addressed above.
straws46
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Re: Buying house with son [and his girlfriend]

Post by straws46 »

Make sure you understand the legalities. I never heard of "joint tenants in common." There is joint tenancy with right of survivorship, and there is tenancy in common in which each fractional share is separately owned. I doubt a typical mortgage loan would be supported by tenancy in common. The only way it would work would be for you to subordinate the fee interest in your half, but that isn't a standard mortgage product. With a joint tenancy you would be required to sign the mortgage document but would be exculpated from the loan, but you would not be exculpated from all the other covenants and agreements such as to maintain the property and pay the taxes and keep it insured. Get good legal advise before you do this.
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RickBoglehead
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Re: Buying house with son [and his girlfriend]

Post by RickBoglehead »

reggiesimpson wrote: Sat Feb 09, 2019 11:12 am
RickBoglehead wrote: Sat Feb 09, 2019 9:31 am We have two grown children, one married in Florida, one unmarried with a long relationship in California. We have zero desire to ever consider living in the same house, even if the living quarters were totally separate, with either of them. They need to have their own lives, and we ours. We'll visit, and more frequently once we retire in two years, but never live in the same house. We also don't have plans to live in the same state.

As noted in a recent post, the OP is going to proceed regardless of what anyone posts. I've never understood why people ask for opinions when they aren't going to act differently regardless. This is so fraught with issues - who gets to deduct property taxes, can any owner force a sale, how does insurance work, what happens if son or girlfriend are sued, and lose in court, what happens if no one wants to buy the house when it has to be sold because of lost job, how do you compel someone to sell a house, the list goes on.

As to eldercare, my in-laws went from house to independent living (forced by health) to assisted living. If OP is thinking his son and girlfriend are going to provide eldercare, ask yourself the question - "Who is going to wipe my rear end for me when I can't?" It's pretty blunt, but I can tell you that neither of my in-laws wanted either of us, nor did we, helping them with personal care. Nor did they want a caregiver doing it, but they knew they could no longer do it themselves.

I hope it works out for the OP and his family, but I see potential disaster written all over this.
A recent study asked the question of the newly retired "How many of you want to live near your children and how many do not?" 50% did and 50% did not. You are in the did nots and we are in the dids. Its literally that simple. I came to BH to get advice and am taking notes based on that advice. Just because i havent changed my mind to follow the major consensus of what we are doing is fraught with "disaster" should indicate to at least some that we have done our homework (readings, atty advice, discussions with our son and gf and many friends). BH is another avenue for additional advice. Thats all. I must say that i am rather dismayed at the lack of social glue that has been displayed. We are talking about family here. Thank you.
reggie
Interesting perspective the term "social glue". Clearly you and your wife have a different perspective that the majority of responders. The fact that someone chooses a career/locale that prevents them from buying a home is a lifestyle choice. My son in California can't buy a shack for the price of our large house in Michigan. He chose to take a job in California knowing that until his career progresses quite a bit, he won't be able to even consider buying. Or, he'll work 5 or so years, then take a job in a lower cost of living part of the country and buy then. To then go in and bail out his choice by paying for half his house changes the future - his path is now directed by your intervention. Big difference in handing a kid a downpayment and buying 1/2 of his house for him.

On the social side, there is a big difference between living near someone and having scheduled visits, and living with someone and always visiting. I want my kids to be able to lead their lives without thinking "oh crap, Mom and Dad are upstairs, I can't run around naked" or "if I buy X, they'll see the delivery truck and ask me what's up" or "can I go to every grandchild's soccer game".

We intentionally located outside the states that both sets of parents lived in. When my in-laws clearly were soon to need help, we moved back, locating close enough to get involved and far enough to let people live their lives. When it was necessary, we moved them to independent living close to us, and visited weekly. Then assisted living. Never consider moving them to our home.

Both went through dementia, one with Alzheimer's. If you've not lived that life, it's incredibly wearing on everyone. I would never wish a relative of mine to have to deal with that 24/7. One relative had to deal with that for many years, his choice to do it in his house, and he died 48 hours after his wife due to his mind and body being attacked by the constant pressure of it.

I'd second the perspective of having your son and his girlfriend read this thread. See how that impacts their decision on accepting this windfall.
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