Buying House for Adult Child

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Oddlot
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Buying House for Adult Child

Post by Oddlot »

I am fully retired and my wife works part time, both in our 70's. SS covers about 60% of our current expenses; no pensions. Our adult only-child lives with us and works part time, wants her own house, but is not close to having the money. Our retirement portfolio is in the lower 7-digits. We live in a higher cost state, but not California. She would not tolerate a roommate.
Our first thought is to cover the purchase price less any financing she can get and hold her accountable for expenses, but frankly, that will be a stretch for her. There are some acceptable houses in the $250K range in our area. The market in our area is tight so prices have been rising.
Has anyone bought a house (or helped buy one) for their adult child and have any wisdom to relate? Did you work with a financial adviser? Any comments would be appreciated.
z3r0c00l
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Re: Buying House for Adult Child

Post by z3r0c00l »

I wouldn't buy a home right now as the market seems distorted, I recommend that she rent for a few years while continuing to save up. Worst-case scenario, she inherits the money many years from now and buys the home then.
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fabdog
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Re: Buying House for Adult Child

Post by fabdog »

Our adult only-child lives with us and works part time, wants her own house, but is not close to having the money.
She would not tolerate a roommate.
Barring some info you haven't shared, like a disability that keeps your daughter from working full time, what is her plan to make this happen? Sounds like she's quite comfortable with you supporting her.

I think the wisdom you'll get is don't do it, but that's your choice.

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KlangFool
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Re: Buying House for Adult Child

Post by KlangFool »

OP,

Please do not help your adult kid sustaining a lifestyle that they cannot afford. It normally does not turn out well.

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mighty72
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Re: Buying House for Adult Child

Post by mighty72 »

Is renting an option? It would give your kid a chance to demonstrate that they can be financially independent and take care of their own place before you spend money to buy a house.
What happens if the kid is not able to keep up with mortgage, taxes and other expenses?
Onlineid3089
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Re: Buying House for Adult Child

Post by Onlineid3089 »

I'd work on the fact that she's only working part time first. Maybe supplement rent at a modest place if you would like to get her out of your house while she gets a few things together.
fup
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Re: Buying House for Adult Child

Post by fup »

Wants her own house

Works part time

Pick one.

[OT comment removed by admin LadyGeek]
stoptothink
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Re: Buying House for Adult Child

Post by stoptothink »

Onlineid3089 wrote: Tue Nov 23, 2021 9:20 am I'd work on the fact that she's only working part time first. Maybe supplement rent at a modest place if you would like to get her out of your house while she gets a few things together.
I hope there is more to this story, but as it is, I assume that her inheritance will some day include a home so I'd let that be the plan until she can begin to be self-sufficient. Not wanting a roommate is not something I'd put a whole lot of value in for a middle-aged adult who isn't attempting to support themselves.
exodusNH
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Re: Buying House for Adult Child

Post by exodusNH »

Oddlot wrote: Tue Nov 23, 2021 8:45 am I am fully retired and my wife works part time, both in our 70's. SS covers about 60% of our current expenses; no pensions. Our adult only-child lives with us and works part time, wants her own house, but is not close to having the money. Our retirement portfolio is in the lower 7-digits. We live in a higher cost state, but not California. She would not tolerate a roommate.
Our first thought is to cover the purchase price less any financing she can get and hold her accountable for expenses, but frankly, that will be a stretch for her. There are some acceptable houses in the $250K range in our area. The market in our area is tight so prices have been rising.
Has anyone bought a house (or helped buy one) for their adult child and have any wisdom to relate? Did you work with a financial adviser? Any comments would be appreciated.
Don't buy someone a house they cannot afford on their own. How will she pay property taxes? Electric? Gas/oil? How will she replace the water heater when it goes? How will she pay to replace the roof or HVAC?

You or your wife may need long term care. There were some posts saying that good facilities range from $12,000-$20,000/month. Don't put yourself at risk by buying your daughter a lifestyle she cannot afford.
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Re: Buying House for Adult Child

Post by Jack FFR1846 »

She wants a house.
She works part time.
She doesn't want a room mate.

Well ok. I want a vintage Ferrari collection and a 20 car garage to store them.

Neither of these are reasonable.
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jeffyscott
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Re: Buying House for Adult Child

Post by jeffyscott »

Oddlot wrote: Tue Nov 23, 2021 8:45 amHas anyone bought a house (or helped buy one) for their adult child and have any wisdom to relate?
I don't know that I have any wisdom, but yes, have done this 3 times. I'd say be open about what you are doing with your other kids, but in your case there are none.

First was a $50,000 house for daughter and her husband. We loaned the full amount and they made monthly payment to us. After a few years they divorced, the husband bought the house, paying off the remaining loan balance and paying daughter for her share of the equity in it.

Second was son buying a condo for ~$50K, he had most of the money. We loaned him $7K for about 6-8 months.

Third was daughter and second husband, gave her $30K as an "early inheritance" to cover most of 10% down payment on a house that cost a bit over $300K. We have adjusted beneficiaries of one Roth IRA for our two sons to offset this gift and they also have the "right" to request this amount as an "early inheritance".
Did you work with a financial adviser?
No.

Since we have been lucky enough to accumulate more than we need (pensions and SS should cover our expenses and more), the kids are going to get most or all of the assets eventually, so why wait if there is some benefit to letting them have some of it early. We also plan to offer to make early distributions to them (perhaps when RMDs begin), in order to help them retire in their 50s as we did, if this is something that they want to do.

Our 3 have always been pretty financially responsible, which is a factor in these decisions.
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lthenderson
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Re: Buying House for Adult Child

Post by lthenderson »

I would not do so just based off what you have said. There are too many avenues to wreck a relationship with a close family member (your child) if things do not turn out the way you imagined with that much money involved.

I would encourage my child to rent and show that they can be responsible and cover all their expenses first before any house was purchased. Even then, I would encourage them to purchase a house that they could still afford all the expenses required to own it.
AnnetteLouisan
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Re: Buying House for Adult Child

Post by AnnetteLouisan »

If OP wants a different perspective from someone whose parents didn’t help them, feel free to PM me.

All I would say here is, do you know in great detail all the consequences to each of you (you, your husband and especially your daughter) of not helping her?
Last edited by AnnetteLouisan on Tue Nov 23, 2021 10:32 am, edited 2 times in total.
ChrisC
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Re: Buying House for Adult Child

Post by ChrisC »

Oddlot wrote: Tue Nov 23, 2021 8:45 am Has anyone bought a house (or helped buy one) for their adult child and have any wisdom to relate? Did you work with a financial adviser? Any comments would be appreciated.
I'm not going to wade into the parenting issue of enabling physically or mentally sound adult children to engage in a life-style that is dependent on parental support, but I have known affluent friends who have done this on two occasions. In both cases they bought the houses using cash, which they obtained in the first case by using the 60 day rollover window for transferring funds from one IRA to another IRA. They then later took out a mortgage on the house that they purchased (using the mortgage proceeds to rollover funds in their IRA), and "rented" the house to their daughter. I don't think the rent covered the mortgage payment and have no idea how they treated this rental on their income taxes. They did consult a CPA for this transaction though I'm not sure this CPA's advice can be trusted, given other advice he has given in the past and they are now actively looking for another CPA. They engaged in this method primarily because it was the quickest way they could get cash in their hands to purchase the house.

In the second case (after they sold the house they purchased above), they purchased another house for the same daughter, but they leveraged a mortgage on their own house (which at that time was mortgage free) to obtain cash for this house purchase. Daughter is again renting the house at below market rates and I believe all outside maintenance, which is considerable, is paid by the parents.

In our case, all three of our children will be homeowners in a few months (one is having a house built, the other two are current homeowners). Our first child needed some assistance, so we gave her money for a downpayment; we were not under any expectation for repayment of these funds, so when she sold the place (a condo) at a loss, we also took a loss as she gave us a proprortionate share of the sale proceeds. The other two children didn't need any assistance from us and these are very expensive home purchases in NYC and Northern Virginia.
Colorado13
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Re: Buying House for Adult Child

Post by Colorado13 »

Your wife working in her seventies while you consider supporting an adult daughter rubs me the wrong way. Maybe that says more about me than about your situation, however.

I don't support your proposal to buy a house for your daughter unless she has some sort of special health needs or other legitimate reason for needing your assistance. Otherwise I think you're doing your family a disservice. Setting her up in her up in a home that she obviously can't afford seems like a no win situation.

Read the book " The Millionaire Nwxt Door" for additional commentary and research regarding the negative impacts of supporting adult children.
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Re: Buying House for Adult Child

Post by dbr »

Oddlot wrote: Tue Nov 23, 2021 8:45 am I am fully retired and my wife works part time, both in our 70's. SS covers about 60% of our current expenses; no pensions. Our adult only-child lives with us and works part time, wants her own house, but is not close to having the money. Our retirement portfolio is in the lower 7-digits. We live in a higher cost state, but not California. She would not tolerate a roommate.
Our first thought is to cover the purchase price less any financing she can get and hold her accountable for expenses, but frankly, that will be a stretch for her. There are some acceptable houses in the $250K range in our area. The market in our area is tight so prices have been rising.
Has anyone bought a house (or helped buy one) for their adult child and have any wisdom to relate? Did you work with a financial adviser? Any comments would be appreciated.
The obvious question is can you afford to buy (and probably maintain) the house? If "lower 7 digits" means you have $3M in your portfolio, then $250k would seem a trivial use of some of your assets while the extra spending would probably be easily supportable.

But you have to tell us what the analysis is. If you need a financial advisor to figure this out try posting her first with the details according to this format: viewtopic.php?f=1&t=6212

Neither I nor anyone else can address relationship issues, which are off topic anyway.
Somethingwitty92912
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Re: Buying House for Adult Child

Post by Somethingwitty92912 »

Hard pass here. That’s unless she is disabled? Besides it being a bad idea with money between family it sends the wrong message in terms of what’s expected of them as an adult in the future.

The housing market is bonkers right now.

If you do choose to do this I’d call it a gift. I wouldn’t expect to ever have anything returned. If you are alright with that than have at it.

However I’d like to offer a word of caution. An excuse me if I am being too blunt.

If she stands to inherit a substantial portion of that wealth, it would do her well to begin learning how to earn, manage , and appreciate large sums of money like that.

If not, the best thing that could happen is they are careless with it. The worst thing is someone takes advantage of them or even worse. Take a look at the history of lottery winners for a better example.
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Watty
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Re: Buying House for Adult Child

Post by Watty »

Oddlot wrote: Tue Nov 23, 2021 8:45 am Our adult only-child lives ....

Our retirement portfolio is in the lower 7-digits. .....

There are some acceptable houses in the $250K range in our area. ......

Did you work with a financial adviser? .....

Any comments would be appreciated.
Probably 99% of "financial advisers" are really just sales people in disguise who will do not have your best interests at heart so it is likely best to avoid them, but that is a topic that you might want to ask about in another thread before you use one.

There are really two seperate questions that are best to consider separately.

Can you afford to buy her a house?

Should buy her a house if you can afford it?

On the "Can you?" question.

If your investments are just over a million dollars then you really can't afford to spend $250K on a house for your daughter since there is a surprisingly good chance that at least one of you will live to be 95 and even over 100 is not far fetched. I don't know what the magic number would be but if you don't have more than maybe $1.5 million in investments, in addition to things like a paid off house, then I would not feel comfortable with the finances of buying her a $250k house.

Another part of the question to look at is if you do buy her a house then can she afford to pay for the maintenance, taxes, and occasional big repairs? If not then you need to consider if you are able to also take on those ongoing expenses.

If you do decide to buy her a house then you should look at your taxes. If you need to sell some investments or make large IRA withdrawals then might want to do some of these before the end of the year so they would be split between your 2021 and 2022 taxes.

On the "Should you?" question.

That is a lot more complicated and based on your age I would guess that your daughter is likely in her 40s or 50s so her work and career situation is unlikely to change much if you take a "tough love" approach to encourage her to leave the nest on and make it on her own like if she was 25. There also may be a backstory like a her being divorced or other complications that don't need to be discussed on a message board.

In addition to her wanting a house you need to also consider what you want. I love my grown up kid but I would not want to live with him.

If she moves out then you may also be able to downsize when you are ready too. If nothing else many single family homes are difficult to live in and socially isolating when you need to give up driving, we ran into this with my Mom. This can also be an issue of one of your survives the other.

If you can easily afford it then buying her a $250K house as part of an early inherences is a judgement call for you to make with no right or wrong answer.

When I was a teenager I had a summer job at a nursing home. One room was shared by a mother who was in her 90s and a daughter who was in her 70s and the mother was actually doing a lot better than the daughter. If you have truly ample funds and will be leaving it to your kids anyway then giving them an early inheritance while they have some use for the money can make a lot of sense in some situations.

It would be more complicated if she was not an only child and you wanted to treat other siblings the same.

Even in a low cost of living area it isn't like you would be buying her a fancy McMansion for $250K.

With a part time job she likely cannot afford even a modest mortgage payment along with the maintenance and taxes. Helping her with a large down payment would likely get her in over her head so I think that if you do it you should really base your decision on if you can afford to pay for the entire house or not.

If you do decide to buy her a house though I would highly suggest that you talk to a lawyer to have the house owned by a trust. This can protect the house in case she gets married and then divorced. It will also prevent her from being able to get home equity loans on the house and losing the house when she can't make the payments.

You might also want to talk to a lawyer about putting her inheritance, or part of the inheritance, into some sort of trust since she may not be good with money. Lots of people like lottery winners, professional athletes, etc have had a lot more money than she might inherit someday and ended up broke because they were bad with money.

Instead of buying her a house you could also consider paying for her rent so that she could live someplace else.

You should also consider the location of the house and even if it cost a bit more having her live near you might be a good idea especially when you are older. My son bought a house about ten minutes from us and that works out a lot better than if he lived 30 minutes away(an hour round trip). With him living that close it is real easy for us to see each other frequently since we can just call then drop by when we are running errands to do something like borrow a garden tool and to have a quick visit or lunch.
Last edited by Watty on Tue Nov 23, 2021 10:36 am, edited 4 times in total.
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Doom&Gloom
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Re: Buying House for Adult Child

Post by Doom&Gloom »

Very different circumstances but years ago my MIL bought modest houses for each of her three children. She ended up buying several homes for one of them. Nothing good--but lots bad--came of her buying any of those houses as far as I can tell.

I would not recommend it. I would suggest encouraging your daughter to get her own home the old-fashioned way: buy one she can afford with her own money/credit.
Wanderingwheelz
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Re: Buying House for Adult Child

Post by Wanderingwheelz »

My 23 yo daughter works full-time and pays rent. She and one of her best friends share a condo that’s less than a mile from her bedroom here in the house she grew up in.

There’s more than one way to learn how to be an adult, I guess. I was actually in favor of her living at home to build up her savings more, but she wanted to be independent.
AnnetteLouisan
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Re: Buying House for Adult Child

Post by AnnetteLouisan »

Maybe provide more details for a more tailored response?
rage_phish
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Re: Buying House for Adult Child

Post by rage_phish »

Never been the gifter in this type of situation…

But my parents paid the down payment for my first condo. And when my wife and I upgraded from that to a house her dad gave her money for her portion of the down payment.

The gifts were exceptionally helpful. No idea how we would have afforded houses here in the Bay Area with out the help. We are very grateful as I’m sure your child would be as well

Outside of parents needing to provide some info to the lenders we used, there was nothing else for them to do really if I remember correctly
Last edited by rage_phish on Tue Nov 23, 2021 10:29 am, edited 1 time in total.
Dottie57
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Re: Buying House for Adult Child

Post by Dottie57 »

KlangFool wrote: Tue Nov 23, 2021 9:04 am OP,

Please do not help your adult kid sustaining a lifestyle that they cannot afford. It normally does not turn out well.

KlangFool
+1
ChrisC
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Re: Buying House for Adult Child

Post by ChrisC »

stoptothink wrote: Tue Nov 23, 2021 9:41 am
Onlineid3089 wrote: Tue Nov 23, 2021 9:20 am I'd work on the fact that she's only working part time first. Maybe supplement rent at a modest place if you would like to get her out of your house while she gets a few things together.
I hope there is more to this story, but as it is, I assume that her inheritance will some day include a home so I'd let that be the plan until she can begin to be self-sufficient. Not wanting a roommate is not something I'd put a whole lot of value in for a middle-aged adult who isn't attempting to support themselves.
There probably is more to this story; perhaps the adult child is afflicted with some disability that prevents her from working full-time or engaging in relationships with others.
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Sandtrap
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Re: Buying House for Adult Child

Post by Sandtrap »

Oddlot wrote: Tue Nov 23, 2021 8:45 am I am fully retired and my wife works part time, both in our 70's. SS covers about 60% of our current expenses; no pensions.

Our adult only-child lives with us and works part time, wants her own house, but is not close to having the money.


Our retirement portfolio is in the lower 7-digits. We live in a higher cost state, but not California.

She would not tolerate a roommate.

Our first thought is to cover the purchase price less any financing she can get and hold her accountable for expenses,

but frankly, that will be a stretch for her.

There are some acceptable houses in the $250K range in our area. The market in our area is tight so prices have been rising.
1
Has anyone bought a house (or helped buy one) for their adult child and have any wisdom to relate? Did you work with a financial adviser?
2
Any comments would be appreciated.
Notations and options: (within forum guidewires).

A
It would be helpful to provide more data in the form of a portfolio review. Otherwise, suggestions are full of assumptions regarding if you can afford this without hurting your retirement, etc. ***without more data, there's just unuseful actionable $$ input.
Edit your original post to includ this data in this format. (use the pencil icon)
Asking Portfolio Questions
https://www.bogleheads.org/forum/viewt ... =1&t=6212

B
Regarding the above information from you: (A nuts and bolts and washers approach. Where the rubber meets the road. IE: no feelings or human dynamics to cloud the always subjective issue).

1) Given your data, think of this as a second home purchase under your name with no tenant and no help paying any expenses, not only similar to a non paying tenant, but supporting a tenant and lifestyle, etc, and . . . with no accountabilty,. . . and no possibility to remove the tenant. IE: a one way street money pit. (can you afford it financially. . . forever. . . likely no).

2) Housing prices and trends and so forth in your area is irrelevant. Would it matter if it was purchasing a condo/apt at half the price? No.

C
**Question for you to answer?
Your retirement portfolio is in the low 7 digits. No pension. Spouse working part time. SS covers 60%. What covers the other 40%?

(7 figures sounds like a lot but depends on a lot of things. Often. . it is not enough).

D
Given your data presented and conditions and dynamics.
"Holding an "Adult - Child" accountable for finances, reimbursements, ownership, etc" seems moot. What do you think, realistically?
Think of it as purchasing a rental for children to live in. If non paying, can you evict? Can you go to court? Etc?
What do you think from a strictly financial disconnected (non relationship) point of view?

E
There is a way to do what you propose as "part of a comprehensive estate planning strategy", perhaps similar to caring for a "special needs" child, etc, etc, etc. (I have done this)
Seek legal counsel.
PM me as you wish.

Per your specific question.
1. Yes. (also have experience with extended family, etc, doing the same with various results).
** It can work out quite well depending on how it is done.

I have, with good results all things considered. :D

2. As above.

** Per forum guidelines, the above missive is focused on the personal finance aspects of the topic introduced.

** Dis Laimer: there are zillions of options and paths and opinonions on zillions of things by zillions of people.

OP: Per forum guidelines per actionable questions and responses and per allowed topics, tangents, and tangentals, and moods of the universe.
PM me as you wish if your topic is locked.
j :D

dis laimer: zillions of paths and options and opinonions on zillions of things by zillions of people. This is just one. :D
Last edited by Sandtrap on Tue Nov 23, 2021 11:49 am, edited 3 times in total.
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dbr
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Re: Buying House for Adult Child

Post by dbr »

I don't see why a person might not buy a home for an adult child if they can afford it and it makes sense in the family relationship considering everyone's needs and desires. It is a personal decision. Another option is to buy a second house and let the child live in it rent free or at some rent. People do these things all the time. This forum is in no position to know for sure what makes sense in this particular case, at least not without a lot more information and relationship issues are off topic.
delamer
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Re: Buying House for Adult Child

Post by delamer »

To cover the $250,000, you’d need to either 1) withdraw a much larger lump sum to cover the purchase and taxes (unless you happen to have the cash in a non-tax-deferred account) or 2) increase your monthly withdrawals to cover the mortgage payment, which may also increase your taxes.

Does that sound doable without jeopardizing your own retirement? A lower 7-digit portfolio could mean anything from $1 million to $3 million.

It sounds like you have doubts about your daughter’s ability to pay for the ongoing expenses of the home including property taxes, utilities, maintenance (short- & long-term), and homeowner’s insurance. So you’d either need to take responsibility upfront for those costs or be prepared to step-in later (or conceivably lose the house).

If you decide that your daughter living in another place is important, then either buying a house and renting to her or subsidizing her rent of a property someone else owns are the better moves.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
av111
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Re: Buying House for Adult Child

Post by av111 »

OP

As parents we do a lot for the kids. But we do not wish to enable destructive behavior

Looking at how she is middle aged and living with you and does not have a full time job why does she want a house of her own? Is it her desire or is someone else advising her

If she is not financially responsible, it may be harmful for her to receive a house free and unfettered inheritance in near future.
AV111
dbr
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Re: Buying House for Adult Child

Post by dbr »

delamer wrote: Tue Nov 23, 2021 10:58 am
If you decide that your daughter living in another place is important, then either buying a house and renting to her or subsidizing her rent of a property someone else owns are the better moves.
My last post also suggests this and I think it makes sense even if one rents to her at no rent or whatever seems reasonable.

There is a lot of missing information about the daughter, and, again, relationship issues are up to the OP. That is why the statement "If you decide . . ." is the right way to put it.
delamer
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Re: Buying House for Adult Child

Post by delamer »

av111 wrote: Tue Nov 23, 2021 11:05 am OP

As parents we do a lot for the kids. But we do not wish to enable destructive behavior

Looking at how she is middle aged and living with you and does not have a full time job why does she want a house of her own? Is it her desire or is someone else advising her

If she is not financially responsible, it may be harmful for her to receive a house free and unfettered inheritance in near future.
Why the assumption that the daughter is middle aged?

We’ll have kids in their early 30’s when we are in our early 70’s.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
AnnetteLouisan
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Re: Buying House for Adult Child

Post by AnnetteLouisan »

Homeownership is a lot of work and responsibility too, generally. She may not even like it. Renting is a great way to find out whether living alone is for her. Less commitment, easier to get out of. I bought (with no help from anyone, especially my parents) and although costs are lower it has some of the negatives I feared. I wouldn’t say homeownership is an unalloyed good for all people and circumstances.
remomnyc
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Re: Buying House for Adult Child

Post by remomnyc »

Parents helping children to buy a house works when the children are financially independent but are unable to afford the downpayment but can qualify for a mortgage and easily carry the costs on their own. In instances where ongoing parental support is required, it rarely ends well. If you want your child out of the house, I would help her rent a place. If she is unwilling to work full-time or take on a roommate, she is probably not prepared to be a homeowner.
Onlineid3089
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Re: Buying House for Adult Child

Post by Onlineid3089 »

delamer wrote: Tue Nov 23, 2021 11:38 am
av111 wrote: Tue Nov 23, 2021 11:05 am OP

As parents we do a lot for the kids. But we do not wish to enable destructive behavior

Looking at how she is middle aged and living with you and does not have a full time job why does she want a house of her own? Is it her desire or is someone else advising her

If she is not financially responsible, it may be harmful for her to receive a house free and unfettered inheritance in near future.
Why the assumption that the daughter is middle aged?

We’ll have kids in their early 30’s when we are in our early 70’s.
Wouldn't middle age start in the early to mid 30s? How old are we expecting the average person to live that the middle section wouldn't start until later? Or is the 'young' section significantly bigger than the 'middle' and 'old'?

I do agree that the info given leaves a really broad potential age range for the daughter. I will also say as others have alluded to, if there are disabilities in play it might dramatically change my position.
MadAsgardian
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Re: Buying House for Adult Child

Post by MadAsgardian »

AnnetteLouisan wrote: Tue Nov 23, 2021 12:15 pm Homeownership is a lot of work and responsibility too, generally.
Not to mention expensive — mortgage aside, who pays for all the incidental costs? Within a few months of moving into my first house I had to pay to replace my electrical panel and rebuild my shower. (granted the latter was covered by a home warranty but there’s still a deductible)

Renting is frowned upon in America, but an apartment with more predictable costs seems like a safer bet for someone who works part-time, and for you if you’re footing the bill.
delamer
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Re: Buying House for Adult Child

Post by delamer »

Onlineid3089 wrote: Tue Nov 23, 2021 12:26 pm
delamer wrote: Tue Nov 23, 2021 11:38 am
av111 wrote: Tue Nov 23, 2021 11:05 am OP

As parents we do a lot for the kids. But we do not wish to enable destructive behavior

Looking at how she is middle aged and living with you and does not have a full time job why does she want a house of her own? Is it her desire or is someone else advising her

If she is not financially responsible, it may be harmful for her to receive a house free and unfettered inheritance in near future.
Why the assumption that the daughter is middle aged?

We’ll have kids in their early 30’s when we are in our early 70’s.
Wouldn't middle age start in the early to mid 30s? How old are we expecting the average person to live that the middle section wouldn't start until later? Or is the 'young' section significantly bigger than the 'middle' and 'old'?

I do agree that the info given leaves a really broad potential age range for the daughter. I will also say as others have alluded to, if there are disabilities in play it might dramatically change my position.
A very quick look shows researchers define middle age as starting between 35 and 40.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
123
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Re: Buying House for Adult Child

Post by 123 »

You shouldn't enable her to acquire a house that she really can't afford.

When people want to live away from home they need to figure things out for themselves. Usually they don't get everything they want immediately but go through a progressive path like shared housing, own apartment, condo, and then SFH. Sometimes they meet a partner or spouse along the way that changes the direction of their personal life for the better. Just let her grow up on her own.

As individuals figure things out for themselves they acquire self-confidence and feel better about themselves. Don't rob her of that.
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wander
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Re: Buying House for Adult Child

Post by wander »

OP, it seems you cannot afford it and your child cannot afford it either. We would help our child to buy house if but we only help downpayment after making sure that they have good incomes to maintain mortgage, property tax, insurance payments ...
neko06
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Re: Buying House for Adult Child

Post by neko06 »

As an adult my parents have never financially supported me. I work two jobs, pay my rent, shop at thrift stores, and home cook all meals. I save all I can and am on track to retire early.

My roommate's parents pay for her rent and tuition. My roommate eats takeout every day, has 1-2 packages from amazon delivered daily, runs up a $100 bar tab on weekends, is in debt on a brand new car, credit card debt, and doesn't have a retirement account.

Support your child with love and knowledge, but make sure they understand the value of the dollar.
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JoeRetire
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Re: Buying House for Adult Child

Post by JoeRetire »

Oddlot wrote: Tue Nov 23, 2021 8:45 am I am fully retired and my wife works part time, both in our 70's. SS covers about 60% of our current expenses; no pensions. Our adult only-child lives with us and works part time, wants her own house, but is not close to having the money. Our retirement portfolio is in the lower 7-digits. We live in a higher cost state, but not California. She would not tolerate a roommate.
Our first thought is to cover the purchase price less any financing she can get and hold her accountable for expenses, but frankly, that will be a stretch for her. There are some acceptable houses in the $250K range in our area. The market in our area is tight so prices have been rising.
Has anyone bought a house (or helped buy one) for their adult child and have any wisdom to relate? Did you work with a financial adviser? Any comments would be appreciated.
So it's clear what your daughter wants yet cannot afford. But what do you want? And what can you afford?

If you desperately want her out of your house, and you can afford to pay for her new lifestyle without putting yourselves at risk, then go for it. Buy a house and let her live in it.

If you like the current arrangement where she lives with you while working part time, then do nothing.

If neither of the two, then consider other options:
- consider telling her she must find her own place to live, and likely work full time to do it
- consider moving all of you into a different living arrangement (like a duplex, or a house with an in-law apartment) where she could live separately in the same building
- tell her she will just have to wait until you are both gone. Then she can purchase a home with her inheritance.

I've gifted money to my sons which they used for a down payment. But I've never funded a house which they could otherwise not afford.

Good luck.
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Stubbie
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Re: Buying House for Adult Child

Post by Stubbie »

KlangFool wrote: Tue Nov 23, 2021 9:04 am OP,

Please do not help your adult kid sustaining a lifestyle that they cannot afford. It normally does not turn out well.

KlangFool
+1
Have seen this too many times with my own family and friends.
Have not seen a child yet who started this way and ended up fully supporting themselves while in that same house.
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MortgageOnBlack
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Re: Buying House for Adult Child

Post by MortgageOnBlack »

For perspective.

I'm 37 and I couldn't imagine even hinting at this. 7 years ago, my parents have given me nothing but love and opened up their 15x15 spare "bedroom" for my wife (then girlfriend), dog, and I to save for a down-payment for 2 years. We gratefully paid rent during this entire time ($400). Our down payment was the money my wife and I saved and earned with our full-time jobs with genuine help from my parents.

To this day, I regularly help my parents with finances (helped them finance a car, house-hold chores, car maintenance, etc...).

I get it, growing up sucks. But you have to make sacrifices. Sounds like a full-time job and room mate are in order. It's called life.
Stoic9
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Re: Buying House for Adult Child

Post by Stoic9 »

We are retired early 60's, pensions, rents, portfolio is far more than we can spend. Spawn went to University overseas, then taught overseas for several years. Came back to US to get Master degree. Had savings from working overseas. Bought a reliable used car and wanted to live closer to University. Worked 4 gig jobs while going to school, went to buy a townhouse, no 'credit history' so very high requirements. We bought it with 20% and 3% loan, new 3/2.5 townhouse nice neighborhood good investment. Spawn immediately got a room-mate that paid PITI plus half utilities. Spawn was raised an ArmyBrat so none of us stay put long. When we sold we got our investment and spawn got equity. Now has a single career job and own place at 2.5%...and a room mate paying PITI.

Us? we are on year 5 of retirement and just bought a new house (our 4th residence since we retired).
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celia
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Re: Buying House for Adult Child

Post by celia »

What does she do with her income?

Why doesn’t she have a savings account to save up for a house? At least half of her income should go into it. That’s what people do when they want to buy something.

Of course, those savings should be after she maxed out her Roth contributions and employer retirement plans.

Buying a house or anything else for her is doing a disservice in having her learn to be self-sufficient. What will she do after you die and “your” money has been spent?
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
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Re: Buying House for Adult Child

Post by humblecoder »

Oddlot wrote: Tue Nov 23, 2021 8:45 am I am fully retired and my wife works part time, both in our 70's. SS covers about 60% of our current expenses; no pensions. Our adult only-child lives with us and works part time, wants her own house, but is not close to having the money. Our retirement portfolio is in the lower 7-digits. We live in a higher cost state, but not California. She would not tolerate a roommate.
Our first thought is to cover the purchase price less any financing she can get and hold her accountable for expenses, but frankly, that will be a stretch for her. There are some acceptable houses in the $250K range in our area. The market in our area is tight so prices have been rising.
Has anyone bought a house (or helped buy one) for their adult child and have any wisdom to relate? Did you work with a financial adviser? Any comments would be appreciated.
As you can see, people are making judgments about your daughter. Most are assuming that there is a "failure to launch" scenario in play (adult, part time job, wants a house that they cannot afford, does not want a roommate), and buying her a house would further enable this behavior. However, I want to point out to the group that there is a possibility of some extenuating circumstances (recent divorce, health issue, special needs, etc). If you can clarify this point, then that would help eliminate some of the noise that you are seeing.

Also, to answer the question "can I do this", it is hard to say. You say your portfolio is "lower 7 digits". You might get a different answer is this means ~$1M portfolio or ~$3M portfolio. So again, you need to clarify your situation in order to get higher quality answers.
LittleMaggieMae
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Re: Buying House for Adult Child

Post by LittleMaggieMae »

Houses are a lot of work - you have a lot of rooms to keep clean. you are responsible when things stop working (a dripping faucet, an appliance that stops working, conforming to neighborhood standards or rules that you might not be aware of until AFTER you move in and you get the welcome letter from the city that lets you know all the things you are suppose to do as a homeowner to conform to local laws and regulations and codes*. You also have a yard to maintain. you might have a garage.

Houses can also be very isolating... as in you might not see or interact with your neighbors. Yes, you don't interact with your neighbors so much when you rent... but if you start to be a problem or don't pay your rent - odds are someone will come and check on you. :)

Before having your daughter move into a house and all the responsibilities that come with it... can you help her get a rental apartment?

Call it the first stepping stone to being responsible for a house. If she can successfully manage being responsible for an apartment and be a good neighbor - she will be more prepared for being responsible for a house.


*it's fall here. homeowners are expected to remove the fallen leaves from their property (usually 30 to 50 foot wide City Lots). You are NOT suppose to push the leaves into the street or burn them in your backyard. And yet every year new residents do this. If a neighbor tells them the laws/rules the person burning leaves or pushing them into the street gets all "holier than thou" on public media about how "well, that's NOT how we did it in my old neighborhood!" .... if no one says anything - the City MIGHT inform them of the laws/rules and the fines associated with it. I can pull some examples of residents being so obsessed with being told they cannot burn leaves or push them in the street that they do it time after time and then wail about the ticket/fine - because since they didn't know about the law/rule before moving in - they are exempt from the laws/rules. And then they wail and gnash their teeth and HATE the City. (I've got 2 of these neighbors... I think they are just unhappy with the homes they bought - as in it's expensive to be a home owner... and they weren't expecting that.)
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Re: Buying House for Adult Child

Post by mrmass »

humblecoder wrote: Tue Nov 23, 2021 2:58 pm
Oddlot wrote: Tue Nov 23, 2021 8:45 am I am fully retired and my wife works part time, both in our 70's. SS covers about 60% of our current expenses; no pensions. Our adult only-child lives with us and works part time, wants her own house, but is not close to having the money. Our retirement portfolio is in the lower 7-digits. We live in a higher cost state, but not California. She would not tolerate a roommate.
Our first thought is to cover the purchase price less any financing she can get and hold her accountable for expenses, but frankly, that will be a stretch for her. There are some acceptable houses in the $250K range in our area. The market in our area is tight so prices have been rising.
Has anyone bought a house (or helped buy one) for their adult child and have any wisdom to relate? Did you work with a financial adviser? Any comments would be appreciated.
As you can see, people are making judgments about your daughter. Most are assuming that there is a "failure to launch" scenario in play (adult, part time job, wants a house that they cannot afford, does not want a roommate), and buying her a house would further enable this behavior. However, I want to point out to the group that there is a possibility of some extenuating circumstances (recent divorce, health issue, special needs, etc). If you can clarify this point, then that would help eliminate some of the noise that you are seeing.

Also, to answer the question "can I do this", it is hard to say. You say your portfolio is "lower 7 digits". You might get a different answer is this means ~$1M portfolio or ~$3M portfolio. So again, you need to clarify your situation in order to get higher quality answers.
The OP seems to have a long history with BH but also has a history of abandoning threads. Just asks and leaves. No follow up.
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Oddlot
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Re: Buying House for Adult Child

Post by Oddlot »

Thanks to all for your thoughtful responses.

As some of you have suspected, there is more going on here, but I don't want to get into more details. We do have concerns for our daughter's ability to live independently and manage money, but we would like to make this happen if at all possible. The relationship is OK.

I think our resources are right on the border line to fund this.

I'm intrigued by ideas along the line of an early inheritance, gift, etc. Anything out of the box, in other words.

I doubt there is a good solution for this, but maybe we are looking for something that is least bad.
av111
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Re: Buying House for Adult Child

Post by av111 »

Oddlot wrote: Tue Nov 23, 2021 3:20 pm Thanks to all for your thoughtful responses.

As some of you have suspected, there is more going on here, but I don't want to get into more details. We do have concerns for our daughter's ability to live independently and manage money, but we would like to make this happen if at all possible. The relationship is OK.

I think our resources are right on the border line to fund this.

I'm intrigued by ideas along the line of an early inheritance, gift, etc. Anything out of the box, in other words.

I doubt there is a good solution for this, but maybe we are looking for something that is least bad.
Good to hear. Is renting not a possibility for some reasons? You could cosign with her if qualification is a concern
AV111
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Sandtrap
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Re: Buying House for Adult Child

Post by Sandtrap »

delamer wrote: Tue Nov 23, 2021 11:38 am
av111 wrote: Tue Nov 23, 2021 11:05 am OP

As parents we do a lot for the kids. But we do not wish to enable destructive behavior

Looking at how she is middle aged and living with you and does not have a full time job why does she want a house of her own? Is it her desire or is someone else advising her

If she is not financially responsible, it may be harmful for her to receive a house free and unfettered inheritance in near future.
Why the assumption that the daughter is middle aged?

We’ll have kids in their early 30’s when we are in our early 70’s.
+1
j :D
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Sandtrap
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Re: Buying House for Adult Child

Post by Sandtrap »

Oddlot wrote: Tue Nov 23, 2021 3:20 pm Thanks to all for your thoughtful responses.

As some of you have suspected, there is more going on here, but I don't want to get into more details. We do have concerns for our daughter's ability to live independently and manage money, but we would like to make this happen if at all possible. The relationship is OK.

I think our resources are right on the border line to fund this.

I'm intrigued by ideas along the line of an early inheritance, gift, etc. Anything out of the box, in other words.

I doubt there is a good solution for this, but maybe we are looking for something that is least bad.
Great responses and concerns all around.
Congratulations on your successes.

PM me if you'd like me to share some ideas that segue into estate planning, etc, that has worked for us with similar concerns.
j :D
Wiki Bogleheads Wiki: Everything You Need to Know
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