Author Topic: purchasing a home for parents  (Read 348 times)

quietCA

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purchasing a home for parents
« on: August 10, 2017, 12:12:54 AM »
My parents are in their late 60s and have been lifelong renters.  They currently pay below-market rent in a house that is in some disrepair, but in which they are comfortable.  Their income is low (my mother works part time for low pay, and my father gets military disability), they have approx. $120k total in savings and investments, which is slowly decreasing.  My wife and I are five years into our 30 year mortgage, have no other debt, an income of ~$150k / year, a healthy 401k and approx. $70k in savings and accessible investments.

I have often struggled with what to do to help my parents’ financial vulnerability, and have been considering the possibility of working with them to buy them a house.  Most likely I would own it with some help from them on the down payment, and they would rent from me.  This would seem to be a major step toward helping their security as they get older, removing them from what seems to be an unsustainable rental situation, reduce the impact of their inevitable reduction in income, and fulfill some vague notion of directing their remaining money towards something of value for them and for the family, instead of their current landlord.  In addition, my older brother is disabled and lives near them.  He receives public assistance that largely pays for his apartment and expenses (although not entirely, my mother contributes ~$200/month), and the house would be there for him in the future if it’s needed.  Otherwise, it could become a rental income property at some point.

How can I evaluate if this is a reasonable idea?  It would be a major new expense, one that comes with complicated and possibly expensive tax issues, and would tie up a large amount of money in an “investment” that wouldn’t see a return for many years, if ever.  At the same time, I have trouble predicting what lies ahead for my parents, and how much additional security a move like this would end up bringing them (and, by extension, myself and my wife and child) as they get older.

And if it’s not, any advice on other steps I should take now to help their current and future financial security?

lizzzi

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Re: purchasing a home for parents
« Reply #1 on: August 10, 2017, 10:25:16 AM »
Since your parents are currently doing OK and it doesn't sound like you really want to invest in real estate at this time I wouldn't do it. Keep investing your money and if your parents ever need housing help in the future you can consider supplimenting or completely paying for their rent. Once they are older or become I'll or infirm they might not even be able to stay in any place you bought for them anyways. So leaving your assets liquid will allow you the $$ and flexibility to help them get into a place that may better suit their needs at that time.

This. Absolutely +1