Author Topic: 2 old folks looking at co-habitating.....with a little catch.  (Read 5941 times)

mtbstuff

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2 old folks looking at co-habitating.....with a little catch.
« on: October 13, 2017, 06:02:07 PM »
We are a couple of 60 y/o people who are looking at co-habitating.(aka:old people living in sin!LOL)
She owns a house that has a home equity loan( worth about a 1/3 of the value of the house) on it the that she used to put her kids through college.

I own a house outright.

The original plan was to sell her house and she'd move into my house and split household payments of utilites, taxes,etc.
But her house has been slow to sell.....and...a developer just offered me very good money for my house.

So now the plan is to move into her home......but she expects me to pay half the monthly equity loan payment (which I look at as her debt).But she sees it as part of the "rent" and I get nothing as far as equity in the house.The monthly payment on the equity loan is $2200.....so I'm adding $1100 to my monthly payout....plus her taxes are higher ( but I don't have an issue with the higher taxes)
So...we are at a impasse.

What say you folks?

AccidentalMiser

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #1 on: October 13, 2017, 06:13:45 PM »
I think you should pay her fair market rent plus half the utilities.

mtbstuff

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #2 on: October 13, 2017, 06:17:15 PM »
I think you should pay her fair market rent plus half the utilities.

Hmmm....if she were to move into my house, I had no plans for rent....just splitting bills.
You think I should charge her rent if she were to move in?

ixtap

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #3 on: October 13, 2017, 06:32:31 PM »
The most financially sound solution is to pay rent, lease and all. It protects everyone.

In reality, few couples do this.

More importantly, if you can't figure this out with both parties feeling that they got a fair deal, are you sure you should be living together?

Cassie

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #4 on: October 13, 2017, 06:41:22 PM »
I am the same age as you guys and if you were not going to charge her rent I don't see why you should pay rent.

MrThatsDifferent

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #5 on: October 13, 2017, 06:54:17 PM »
What an interesting dilemma. I see where both of you are coming from, neither position is right or wrong. However, relationships equal compromise. Something has to give. My thinking, it should be you. Hereís why: itíd be untenable for you to live in her place while she pays the mortgage and you just pay bills, sheíll be resentful and your life would be miserable. And youíre now getting all the sweet sweet cash from your place that you can invest and grow. If she moved into yours, you would not have this money until/unless you sell, which might have been unlikely. Youíd probably would have kept that asset and it would have benefited your heirs more than you.  Now you get the money and you have to pay $12000 a year, which might be covered by the growth of investing your housing funds. I think youíre in the better position all around, if it doesnít work out, you can walk away and set up whatever you want for yourself. Youíre fine. Donít get too much in the money part of wanting a piece of her equity, you have her, enjoy that.

bacchi

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #6 on: October 13, 2017, 07:11:09 PM »
^^^ We did the opposite. The SO moved in, paid the utilities, and I covered the PITI. We were ok with that because all of the equity was mine.

scantee

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #7 on: October 13, 2017, 07:53:20 PM »
^^^ We did the opposite. The SO moved in, paid the utilities, and I covered the PITI. We were ok with that because all of the equity was mine.


I think something like this is the best solution.  She continues to pay the home equity loan, in its entierity, which preserves her clear and full ownership of the house.  You pay the utilities and maybe assume some other joint cost like the grocery bill, which will be considered your "rent."

Rowellen

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #8 on: October 13, 2017, 08:27:09 PM »
What about a third option. She rents her place out thereby covering her mortgage. You sell yours.  You rent a separate place entirely together.

MrThatsDifferent

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #9 on: October 13, 2017, 08:30:46 PM »
What about a third option. She rents her place out thereby covering her mortgage. You sell yours.  You rent a separate place entirely together.

Honestly, this is the best option. When I moved in with my partner the place never felt like it was mine. Life was better when we found a place together and started on equal footing.

Astatine

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #10 on: October 14, 2017, 02:18:44 AM »
What about a third option. She rents her place out thereby covering her mortgage. You sell yours.  You rent a separate place entirely together.

Honestly, this is the best option. When I moved in with my partner the place never felt like it was mine. Life was better when we found a place together and started on equal footing.

+1

Also, what are the rules around de facto/common law marriages and finances where you live, particularly in the event of the relationship breaking down? (For example, in Australia) If you're you this angsty about finances prior to moving in together, I'd do this research first. (actually that's probably good advice regardless)

TartanTallulah

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #11 on: October 14, 2017, 04:28:24 AM »
What about a third option. She rents her place out thereby covering her mortgage. You sell yours.  You rent a separate place entirely together.

Honestly, this is the best option. When I moved in with my partner the place never felt like it was mine. Life was better when we found a place together and started on equal footing.

+2. My husband moved into my house, but it was always clear that we really needed a place that we could both regard as "ours" and not "mine" or "yours". In the end we not only moved house but moved to a mutually agreed location 200 miles away.

Otherwise, I'm trying to get my head round what's happening. You're going to sit pretty in your partner's house with a chunk of cash from your home sale and not contribute any "rent" on top of household bills? This smells a little of, "What's yours is mine and what's mine is mine." If half of the home equity loan is a lot more than a fair market rent in your partner's area, it might be reasonable to try to negotiate the sum downwards, but it sounds as if the only thing your partner would be gaining from the arrangement is another person living under her roof and the small economies that result from being a two-person household. And I wonder whether there are factors in her background (or concerned adult offspring) giving her reason to be determined that you should be seen to make a proper financial contribution.

Dee

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #12 on: October 14, 2017, 06:26:23 AM »
Any interest in you buying into her house so that you both become owners of that house?


mtbstuff

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #13 on: October 14, 2017, 07:26:09 AM »
Thanks for the replies.....interesting info.

My view of her home equity loan is the same as if it were a $200K credit card bill. It's not my bill. And if I had the same equity loan ( or c/c bill), I wouldn't think of asking her to contribute to the payment.

And as far as some kind of rent at her place....we haven't discussed that. I guess we should.

If I sell my house....we discussed selling or renting her house....and buying a neutral / new place together. But, oddly... she wants to keep her money and expects me to buy the new place. Hmmm....

I am now thinking sell my house, buy a smaller place ( both our houses are bigger than we need)....then look at it all again.

So you folks seem to think that splitting bills and some kind of "rent $$" for me if I move to her place...or same for her if she moves to my place? ( I honestly feel weird about asking for rent)
« Last Edit: October 14, 2017, 07:49:17 AM by mtbstuff »

sokoloff

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #14 on: October 14, 2017, 07:44:29 AM »
My (now wife) GF insisted that she pay rent when I bought the house we now both own as a couple. I didn't care either way, but felt strongly, so whatever. We split most bills right down the middle and she paid about 75% of what she was previously paying to rent a 1BR.

I think you guys are in a path-dependent confused state. (That the path you each took to get here is coloring your opinion of the current situation, when only the current situation should matter.)

To break out of that:

Start by imagining that both of you have sold your current homes and are looking to move into a place together. (It's obvious from the above that you intend to keep separate finances... :) )

Further, imagine in this world that the only way you could have a place to live is by renting (that private home ownership simply wasn't a thing).

How would you approach splitting the monthly bills, including the rent?


Once you have agreement on that, you can add the complicating factor of whether one or both of you will be the real estate investor and landlord financially.

Whoever ends up being "the landlord" should expect to take a significant haircut on the full fair market rent (in exchange for sleeping with the tenant and knowing the worst-case tenant outcomes are extremely unlikely).

Hargrove

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #15 on: October 14, 2017, 07:57:41 AM »
If I sell my house....we discussed selling or renting her house....and buying a neutral / new place together. But, oddly... she wants to keep her money and expects me to buy the new place. Hmmm....

NOPE.

So, what, "let's move in together as long as you give me money/foot the bill"?

We have no idea if she sees it this way. You're torn enough that you posted on a forum about it. If it's not possible for you to ignore this (your tone says you want to but your actions say you don't), you'll have to bring it up directly with her.

If she can assume, without blinking, that you'll foot this, and you can't talk about it, you're going to only make it much worse if you wait to voice this (or, potentially, the next thing) any later than right now. I wouldn't sign up for this, or establish the precedent.
« Last Edit: October 14, 2017, 08:49:27 AM by Hargrove »

undercover

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #16 on: October 14, 2017, 08:22:18 AM »
Asking for you to pay half the equity loan is completely unfounded, I agree. Asking you to pay the market value for a room in her house is completely understandable and I think that's what you should do. I guess it's even fair for her to ask for half of the market rent on the home given that you'll have access to the entire house. But charging for a "room" factors in the SO discount.

Again, I think it's fair for her to ask that. Housing costs something for everyone. If you're generous enough to let her live for free with you, that's completely your prerogative. Personally, unless I'm completely FI, I wouldn't let anyone live for free with me.

pbkmaine

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #17 on: October 14, 2017, 08:48:50 AM »
The fact that you two are struggling with this means that you are not ready to move in together. I think you could benefit from some couples counseling first. Combining two lives always involves compromise.

DH and I lived together for years before marrying. We did not always split expenses equally, but the split always seemed fair to both of us. If you two can’t get to that place, then there’s not much hope for you as a couple.

MrThatsDifferent

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #18 on: October 14, 2017, 08:49:59 AM »
Thanks for the replies.....interesting info.

My view of her home equity loan is the same as if it were a $200K credit card bill. It's not my bill. And if I had the same equity loan ( or c/c bill), I wouldn't think of asking her to contribute to the payment.

And as far as some kind of rent at her place....we haven't discussed that. I guess we should.

If I sell my house....we discussed selling or renting her house....and buying a neutral / new place together. But, oddly... she wants to keep her money and expects me to buy the new place. Hmmm....

I am now thinking sell my house, buy a smaller place ( both our houses are bigger than we need)....then look at it all again.

So you folks seem to think that splitting bills and some kind of "rent $$" for me if I move to her place...or same for her if she moves to my place? ( I honestly feel weird about asking for rent)

I donít get this need to buy a house, thatís whatís messing everything up. You donít need to buy, at least not now. Sell yours, she rents out hers and you both rent together. Live together renting for a couple years, get used to each other and make sure this is what you both want.  If all is well and you feel the need to buy, then do that. She can sell her place and you can buy as equals.

frugaliknowit

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #19 on: October 14, 2017, 09:27:12 AM »
I think if a couple is truly committing (i.e. planning to stay together indefinitely and not just "going for a test drive"), they should rent or buy a place together.  While one moving into the other's place is perceived as financially less risky and may in fact end up saving transaction costs (especially if the relationship doesn't work out), often when one moves into the other's place there's "less of a bond" where one partner feels (especially over time) that they're living in their partner's place, not "their place", which can be conducive to "one foot out the door", perhaps more readily than if the couple owned or leased together as a couple.  JUST an opinion, please don't be offended couples who disagree...!

That said, in your case, if you are going to move in with your gf/bf/whatever, I would determine the fair market value of the rent of the place, divided by 2.  That's what's fair. 

Why not just do sleep overs?  Much easier, especially if you're not willing to do a housing transaction.

mtbstuff

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #20 on: October 14, 2017, 09:36:16 AM »

Why not just do sleep overs?  Much easier, especially if you're not willing to do a housing transaction.

Hahaha! That would make it all so simple...and I really thought life would be simple at this point ( And for the most part, it is)
She has a $200K loan and house expenses that she really can no longer afford.
I have a great offer on my house.

Again...thanks for all the input from everyone.

Catbert

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #21 on: October 14, 2017, 10:00:07 AM »
I write as someone about your age (although married for many years).  I'm a woman if that matters.  My initial thought was that you had each had rational although different approaches.  I would categorize yours as "generous" and hers as "practical".  IMO either could be viewed as "fair."  But then you said that a fallback would be for you to purchase a smaller/cheaper house and her position is that you should pay the mortgage without a contribution from her of any kind.  Hmmm...that's neither practical nor fair.  You may find that your future is that her money is "hers" and your money is "ours".  Not a situation I would want to be in.

You should definitely not buy a house together.  No unmarried couple should entangle their finances that much.  One of you should own the home or you should rent. Are your income/assets so different that "fair" could be you paying the lion's share?    If you each paid in a certain % of income (10%, 20% or whatever) into a household pot to pay mortgage, utilities, regular maintenance would that work?  Would it seem fair to both of you?   

MrMoneySaver

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #22 on: October 14, 2017, 10:53:03 AM »
What about a third option. She rents her place out thereby covering her mortgage. You sell yours.  You rent a separate place entirely together.

Honestly, this is the best option. When I moved in with my partner the place never felt like it was mine. Life was better when we found a place together and started on equal footing.

Exactly. Otherwise you're a perpetual guest.

Bicycle_B

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #23 on: October 14, 2017, 11:48:56 AM »
I write as someone about your age (although married for many years).  I'm a woman if that matters.  My initial thought was that you had each had rational although different approaches.  I would categorize yours as "generous" and hers as "practical".  IMO either could be viewed as "fair."  But then you said that a fallback would be for you to purchase a smaller/cheaper house and her position is that you should pay the mortgage without a contribution from her of any kind.  Hmmm...that's neither practical nor fair.  You may find that your future is that her money is "hers" and your money is "ours".  Not a situation I would want to be in.


Catbert, brilliant as usual, has identified a key issue that you state without seeming fully to recognize:  your intended partner in sin wishes you to pay for her living space.   She does not wish to split expenses.  She wants you to pay unequally. 

I can only speculate what the significance of this is, but I recommend that you think it about specifically, and decide upon your response based on careful consideration.  Here are my questions.

1. Is she viewing you as partly or primarily as a financial rescuer - a knight in dollar armor?
2. Does she view the woman's role as being desired lover, while men are (to be blunt) basically supposed to pay for the privilege of being with her? 
3. Is she honest with herself about whatever her views are, or does discussing these matters require articulating things that she does not admit to herself?

If option 2 is the main thing, it's up to you whether you wish to enter the venture on her terms, but you need to be aware that's what you're doing.  Living in her house and paying half the mortgage while getting no equity is a perfectly limited implementation of path 2.  Buying or renting a separate place that she lives in for free would also fulfill 2, but in your shoes I wouldn't undertake the level of risk entailed in buying a new place.  Taking the good offer to sell your own home might be a good idea... except that then you have ready cash that she might view as, um, "ours."

If option 1 is the main deal, and you think that a partnership means equal contributions at your age, tell her no. 

If the unclear part of option 3 is the main deal, you have someone using relationships to cover her confusion. I'd stay away from that too.  Just my opinion, though.  Love is a many-splendored thing.

My family had someone in his 60s who got roped into 1, 2 and the unclear part of 3.  He was so suckered by her that he proposed marriage.  Lucky for all of us, she refused.  In the end, a different "partner" appeared... one who had her own funds. Lucky again! 

May fortune smile upon you...
« Last Edit: October 14, 2017, 12:03:39 PM by Bicycle_B »

frugaliknowit

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #24 on: October 14, 2017, 12:29:59 PM »
"She has a $200K loan and house expenses that she really can no longer afford".

In this case, she should get rid of her house.  This might require she lower the asking price and or do some fixups...

talltexan

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #25 on: October 14, 2017, 12:54:20 PM »
It seems like the two of you have quite different balance sheets and cash flow situations. I'd want to set things up so that the person with the stronger cash flow was "renting".

You may be able to make yourself that person if you manage the proceeds from selling your house correctly.

Cpa Cat

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #26 on: October 14, 2017, 01:00:57 PM »
Sell your house. Continue to try to sell hers.

Buy a smaller place together (or that you own wholly). Or rent a smaller place and split the costs - which may be a better way to go, at least to start, while you guys get used to the financial details of living together.

When her house sells, she will pay off her home equity line of credit and have a lot more cash flow. Charge her a minor amount of rent if you own the new place wholly. Split the rent of if you have a landlord.

I don't see the logic in keeping a house that's too big that's saddled with one person's debt when you could sell it and not have that debt weirdness.

Linea_Norway

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #27 on: October 14, 2017, 01:06:21 PM »
If your house is too big and too expensive for you and you can get a good price for it, then sell it.

I support the others that it is not ideal to move into a partner's house. It will always be her house. Much better with a new house, especially when she cannot afford her current house. You two moving together is of course financially beneficial for both of you if you can share costs. But you moving in with her should not only solve her financial problems. If she can solve her current financial problems by selling her house, do that and rent a place together. Build up some trust in her first. Rent is easier to divide in some reasonable way than if you financed the new house all alone.

I see it as unreasonable if you let her stay at your place for free. I think it makes sence to let her pay some form for rent.

When DH and I moved together when we were young, we still had separate finances. He made about 50% more money than I did and contributed 50% more to common account that we used to pay rent, insurances, food etc. We used our own accounts for our private things like clothes, gifts, ect.

GuinnessPhish

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #28 on: October 14, 2017, 01:44:37 PM »
Just curious, OP.  How long have you two lovebirds been with each other?


Dicey

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #29 on: October 15, 2017, 07:42:51 AM »
POV: Same age, plus I married for the first time only five years ago.

On one hand, if the 200k was just a mortgage balance, how would you approach it?

OTOH, this could be an indicator of a different set of problems. Clearly, she got in way over her head with her children's college expenses. How did that happen? What's to say she doesn't make sub-optimal money choices when her kids "need" something else in the future?

Also, +1 to both of you sell (or rent out, in her case) and rent another place together.

And saying her house "won't" sell actually means, "The owner is seeking an unrealistic price."  What sellers owe or need to get out of a house is completely irrelevant to buyers.

With This Herring

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #30 on: October 15, 2017, 08:08:25 AM »
*snip*
I see it as unreasonable if you let her stay at your place for free. I think it makes sence to let her pay some form for rent.

When DH and I moved together when we were young, we still had separate finances. He made about 50% more money than I did and contributed 50% more to common account that we used to pay rent, insurances, food etc. We used our own accounts for our private things like clothes, gifts, ect.

+1

Alternatively to the proportionate-to-income/assets method, DBF and I make unequal incomes, so we set our expenses to the level supported by the lesser income.  With salaries of 3X and X, the apartment chosen has rent at the level that X supports.  Each of us pays 1/2 rent.  That way, if (in theory) we were to split, the lesser-earning partner wouldn't have gotten accustomed to/dependent on the nicer apartment style afforded by a greater-than-X income, and the greater-earning partner wouldn't feel put-upon for subsidizing years of living.

Assuming you are understanding her opinions correctly (and it's possible that wires have been crossed somewhere!), you two do not think about money in relationships the same way.  It could be "The one who has more spends more" or "the woman gets supported completely" or even "you will temporarily support me until my finances are sorted out, but then I'll pay you back in full."

If market value rent of her house would actually be the same as her HELOC payment, then you paying 1/2 that amount would make sense.  Unless you two both buy a house together (DON'T), at least one of you should be paying rent.

Cassie

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #31 on: October 15, 2017, 05:10:12 PM »
Since it appears that she has financial problems what about determining the fair market value of rent for her home and then you 2 split it in half?  That is fair to both and if she still can't afford it then she needs to sell.

electriceagle

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #32 on: October 16, 2017, 12:58:50 AM »
Assuming you are understanding her opinions correctly (and it's possible that wires have been crossed somewhere!), you two do not think about money in relationships the same way.  It could be "The one who has more spends more" or "the woman gets supported completely" or even "you will temporarily support me until my finances are sorted out, but then I'll pay you back in full."

It sounds like the two of you have not discussed the financial arrangements of this relationship sufficiently. The housing arrangements are just a vehicle for this issue to be either resolved or not.

The only place where I disagree with most of the replies is the implication that you should dump the relationship if the financial arrangements are wrong.

You may feel that the supply of potential partners gets thinner as time pases. Its ok to decide that the good parts of a relationship outweigh even fundamental flaws (especially since you're not going to have kids without major medical intervention).

Just be sure that you know what hole you're falling into and that you can live with it.

AccidentalMiser

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #33 on: October 16, 2017, 04:29:30 PM »
I think you should pay her fair market rent plus half the utilities.

Hmmm....if she were to move into my house, I had no plans for rent....just splitting bills.
You think I should charge her rent if she were to move in?
Yep.

AccidentalMiser

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #34 on: October 16, 2017, 04:30:33 PM »
^^^ We did the opposite. The SO moved in, paid the utilities, and I covered the PITI. We were ok with that because all of the equity was mine.

Yes, this could work, too.

Goldielocks

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Re: 2 old folks looking at co-habitating.....with a little catch.
« Reply #35 on: October 16, 2017, 04:51:02 PM »

Why not just do sleep overs?  Much easier, especially if you're not willing to do a housing transaction.

Hahaha! That would make it all so simple...and I really thought life would be simple at this point ( And for the most part, it is)
She has a $200K loan and house expenses that she really can no longer afford.
I have a great offer on my house.

Again...thanks for all the input from everyone.

A version of this is for you to sell your place (it seems that it is the right timing / choice for you now), and rent a TINY place.   A 1 bedroom, decent but older, no view sort of place for very little money.  Then you can each have your own place, you technically live in your own place, but have sleep overs at hers.  (vice versa if she likes -- she won't).  You don't need to pay any rent.  If you want to be the nice guy, you maybe buy the groceries, more than your share.

Eventually she needs to decide what she wants to do with her place.   She may not be ready to sell it yet, or has not yet faced up to the HELOC reality.   That's ok if she takes her time.   I mean, she is 60 so should make these choices for herself, on her time.

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If you do move in with her, yes, pay rent, but I would charge my BF the amount to rent a room, plus half utilities and half groceries.  (Maybe more than half the groceries if your income is higher).  We would re-evaluate if / when we moved.