Which part of Toronto is it? Some are much more overvalued than others. First, I would run the numbers and see what the costs of owning vs renting are.
To buy a nearly identical unit in the same building that we're currently in would cost around $310k-$340k. Maintenance fees would be around $410/month. Our rent is $1590/month, but we rent out our parking spot for $140/month. Assuming home prices increase with inflation, renting and investing the difference is better (but not by a huge amount) according to any buy/rent calculator I've run the numbers through. But I think home prices are going to crash somewhat in the not-too-distant future. And we plan to have 2-4 children in 5-10 years, which will require a larger space than what we have now. Buying now simply doesn't make sense to us. Buying in 5-10 years very well might.
As far as the "down-the-road" problems, Do they have any history of being controlling? Even if they give you that $ now and later see you succeed.. Will they think you started this early saving for FI, or will they say "wow, they sure did well and we helped start them out right!"
My soon to be in-laws moved to Canada to create a better life for their children. They say they view this financial head-start as a part of that. I think they would be happy to see us succeed.
But, when you do buy as house, you should include them on your second walk through before purchasing, so they feel involved with your life. And be ready to listen to their suggestions. If you can't do that, don't accept the money.
We would be willing to do that. My father-in-law has a few rental properties, so I would love to get his advice and opinion on any place we are looking to buy. Thanks for sharing your experience, it helps us feel better!
My spouse was gifted by her parents during the 1990s NASDAQ runup. She repeatedly said "Thanks, not necessary" and was told that they wanted to treat her and her brother equally. She was also told that she could do anything she wanted with the money but should keep it safe "just in case". Perhaps the intent was to give her the assets to help pay for their elder care before the Medicaid lookback period kicked in.
You may be wondering what asset allocation allows you to "do anything you want with the money" while keeping it "safe just in case". She got no guidance from her parents other than that, so she elected for T-bills and CDs.
A few years later her parents made some major changes to their lives, subsequently decided that they'd made a mistake, and then had to deal with the suboptimal financial decisions that had accompanied the lifestyle change. When they elected to buy a condo, they told her "Listen, we need to make a down payment so we'd like you to give our money back." (That's my emphasis on the word "our".) Apparently they'd never really given the money away after all-- just transferred it to a new custodian who worked for free.
I did the freakin' bookkeeping on that money for nearly a decade (spouse warned me this might happen), and when she gave it back she had to deal with the "Is that all there is?!?" query from her folks. Getting rid of that family money felt just like paying off a car loan or student debt. Spouse has told me that she won't give her parents any more money, but if her parents have long-term care expenses then she'll offer to split the tab with her brother.
You could always ask your prospective parents-in-law for their gift to be in the form of a gift certificate to be redeemed at the suitable time. But maybe you also want to have a long talk with your spouse about getting out from under her parents. If it works, please let me know what you did so that my spouse can try it with her parents...
Thanks for sharing, Nords. I suppose this is what I'm worried about - being asked for the money back later. I'm thinking that before we accept the money, we would speak to the parents and share what we would do with it, asking for their input. eg "Since this is intended to be a downpayment, we were thinking of investing in a GIC at X bank at Y%. Do you have any advice?" I would want things to be very clear.
My spouse is independent of her parents, but comes from a culture where parents often give their kids help of some kind when they get married. She's very appreciative, but feels a little bit uncomfortable/embarrassed accepting help, as do I. :)
I see three places where this could get ugly:
1) They want the money back: I would talk to them about their financial situation to make sure it's stellar before accepting money.
2) Divorce: You and your wife should decide where the money will go if you split before accepting it. Have this conversation again before buying a house.
3) Extreme Early Retirement (under 50): if you're considering this, it could upset them to feel like they're paying for it. Ideally you would talk to them before accepting the money.
I've been given gifts that were truly gifts from my parents. I don't talk about it much because I'm embarrassed, and I'd imagine others feel similarly. Some factors that I think make it work are 1) I'm open with them about money and they over saved for retirement, then inherited some. 2) They like my goals; they encouraged me to major in art (I didn't) so they're glad that I'm saving up to become an artist. 3) They've let me do what I want with the money, my mom wanted me to take trips to Europe or something, I've invested it. If they asked for it back or started making demands I'd give it back, but it would be hard not to be resentful.
Thank you for the advice! I've definitely been mulling over sharing our plans for early FI. This is not something we've really shared with anyone yet (besides probing the waters with some friends), but I don't want feeling to get hurt down the line. Having a good relationship with our parents is very important to both of us.
At this point I'm thinking of very clearly laying down some expectations, and asking for their input. Something like this: "We don't plan on buying right now, but are very grateful for the generous gift. Since this money is intended for a down-payment, we intend to invest it in {safe, low-yielding investment} at {x}%. We'd love your advice if you have another suggestion. If you change your mind and would like the money back before we buy a house, you're welcome to it + all the gains. When we are looking to buy a house, we'll let you know and would love your advice as we make our decision." Something like that.