Author Topic: Buying a cheap home for my dad in Houston  (Read 3402 times)

Emergo

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Buying a cheap home for my dad in Houston
« on: March 13, 2016, 08:47:35 PM »
What's the best way to go about buying a house for my 55+ year old dad so he can not have to worry about being homeless and also wont hurt me too much financially? He basically has no retirement and can only afford 350$ rent. He's all alone and im his only son. Obviously i wouldnt want him to live in the dangerous streets... maybe a 60k to 70k range house would be good. If you guys wanna know my situation please see my old topics.


Emergo

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Re: Buying a cheap home for my dad in Houston
« Reply #2 on: March 13, 2016, 09:25:49 PM »
Sure, i can find a 70k find home but im saying, maybe you guys have a savvy way of making this easier for me financially.

Another Reader

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Re: Buying a cheap home for my dad in Houston
« Reply #3 on: March 13, 2016, 09:43:13 PM »
It does not make sense for you with a salary of $64,000 to buy a house for your father.  If you do not own a house, it might make sense to buy a duplex or a house with an attached apartment where your father could live.  The rent he pays could help with the mortgage.  However, aren't you living with your mother now?  If you are living with family and saving money, it might make the most sense to find your father an inexpensive apartment and pay the difference between the $350 he can afford and the apartment rent.

Emergo

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Re: Buying a cheap home for my dad in Houston
« Reply #4 on: March 13, 2016, 10:29:00 PM »
Well, he cant keep renting forever...

What about buying a lot and building a house on it? And renting it out? What are some good alternatives. Isnt a duplex or a house with an attached apartment expensive?

ShoulderThingThatGoesUp

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Re: Buying a cheap home for my dad in Houston
« Reply #5 on: March 14, 2016, 06:12:17 AM »
Why can't he keep renting forever?

ooeei

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Re: Buying a cheap home for my dad in Houston
« Reply #6 on: March 14, 2016, 06:19:14 AM »
Well, he cant keep renting forever...

Sure he can, people do it all the time. 

A relevant post:
http://jlcollinsnh.com/2014/02/20/case-study-10-should-josiah-buy-his-parents-a-house/

pbkmaine

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ooeei

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Re: Buying a cheap home for my dad in Houston
« Reply #8 on: March 14, 2016, 10:42:46 AM »
I just noticed in another thread you said he makes $24,000/year.  How is it he can only afford $350 in rent?

Emergo

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Re: Buying a cheap home for my dad in Houston
« Reply #9 on: March 14, 2016, 11:52:56 AM »
I just noticed in another thread you said he makes $24,000/year.  How is it he can only afford $350 in rent?

He's made bad financial decisions in other areas

LouLou

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Re: Buying a cheap home for my dad in Houston
« Reply #10 on: March 14, 2016, 04:39:51 PM »
I just noticed in another thread you said he makes $24,000/year.  How is it he can only afford $350 in rent?

He's made bad financial decisions in other areas

Don't do it.

I had the same thought for my mom.  She has no savings and was renting.  Mortgages for small homes in my region are much cheaper than rent.  I could get senior friendly ranch for aging in place.  We even looked at places!  But ultimately I decided against it.

My mom and your dad's history of bad financial decisions means that you will be floating the entire cost on your own - down payment, repairs, replacing appliances, taxes etc.  You father has shown that is not willing or able to plan ahead.  My income is substantially larger than yours appears to be, and all that would still give me more debt and obligation than I was willing to handle.  I was looking at properties within the 60k-80k range.

Plus, the money you spend on a house is money that you can't use for medical emergencies and healthcare later.  There is no way to tell whether either of our parents will need serious care in the future.  I would rather make sure that she has good treatment options if/when something major happens.

And there's the maintenance.  Your father may able to do the required yard work and house care now, but maybe he won't be several years from now.  Taking care of another house would be a huge burden.

My husband and I are making some changes to our house to make an in law suite for my mom.  She will be our nanny for our baby, due in July.  It is a win-win all around. She lives somewhere private and nice, she doesn't have to worry about expenses, we spend WAY less money than buying a whole other house so we will have more funds for a true emergency, she and the baby will develop a close relationship, etc.

Maybe a multigenerational home with your dad is in your future.  Based on the other comments about your finances, you cannot do this now.   

wenchsenior

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Re: Buying a cheap home for my dad in Houston
« Reply #11 on: March 14, 2016, 06:05:17 PM »
We've been discussing this somewhat here, and the thread might give you some additional options to consider, such as low income senior housing, etc.

http://forum.mrmoneymustache.com/ask-a-mustachian/financially-supporting-aging-parents-during-fire/

We wavered on this very decision, and finally did purchase a second home for my mother (65K). We had about 20K more take home income than you do at the time, but we had no down payment. We did, however, have our own home, 15 yr mortgage with about 40K of equity. We 1) refi'd Mortgage A to 30 yr to free up cash flow; 2) took out a 20K home equity loan against the A house's equity as a down payment on the B house; and 3) purchased the B house on a 30 year mortgage to keep payments low.

Of course, then we had a much bigger debt load. To deal with it, we 1) slashed spending; 2) paid off the home equity loan in 2 years (because it had around 6.5% interest rate); 3. After a couple more years, we refinanced A house again, back to 15 yr with a very low interest rate; and 4) simultaneously pulled ALL the equity available from house A again, and this time it was enough to completely pay off the higher interest mortgage on house B. So now we are back to one 15 year mortgage, at extremely low interest, on house A, but with less equity in that house. And we now own house B outright.

This was NOT the only option available. 1) A much cheaper option was to have my mother move into low income senior housing, with or without cash subsidies from us under the table. 2) A more expensive option would have been to have her just rent like a normal person, with us subsidizing a big portion of that rent and or utilities. 3) The cost/benefit of actually buying a house for her has just about hit the 'break even' point for us about 6 years in (we could get out of the house by selling it, just about the total of what we put in terms of mortgage/fees/taxes/upkeep costs, etc). 4) The final option we considered was selling our own house, and moving into a much larger house, specifically configured with a an in-law type suite, etc. Or buying a bigger house and remodeling. Something so we all shared the same living space.  I suspect the 'break even' point on that would have been pretty similar.

I would not recommend buying any home, much less a second home, unless you are very financially stable and have solid income prospects. I would not recommend buying any home unless you are sure the occupant will be remaining in that location at least 5 years or more.  I would not buy a second property unless you will be in close proximity and have the time and cash flow to be sure the property is properly maintained. I also would not buy a home for someone else unless I was completely confident they would be open and cooperative about their finances, and would not make stupid decisions when I wasn't looking. I would not recommend buying a second property to any but high income earners in most markets in the country (Texas real estate is very cheap, the state's senior care programs are limited, and that played into our decision).

In our case, it turned out to be good decision overall, though not necessarily the cheapest in terms of raw numbers, and we have reached the point where our sunk costs are zeroed out. HOWEVER, we are periodically facing the prospect of a move to a different state. In that case, we will deal with the exact same dilemma all over again in more expensive location. If this were to occur, we do NOT anticipate purchasing another alternate property, but would have to rely on one of the other options outlined above.