Author Topic: Sending my parents to the garage . . .  (Read 1612 times)

canisius

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Sending my parents to the garage . . .
« on: October 24, 2018, 09:57:11 AM »
So, yeah . . . we're going to try multi-generational living.

We live in a townhouse suburb of Fort Worth and my parents live further out on what was once a mini-ranch and now is a couple of acres of woodland and a house.  I currently live a mile away from work (as does my wife).  In this new house we'd be about ten miles away, but my wife and I would carpool. 

Mainly my parents are asking that we take their house, and they'd build a mother-in-law suite in the garage.  Especially now that they're older and didn't take good care of themselves (Father is 72, has emphasima and was recently diagnosed with stage three  chronic kidney disease, all from 55 years of smoking a pack a day).  Mother is 67, diabetic, HBP, family history of Alzheimer. 

We've always offered to take care of them when they got older as long as we viability could, and so that is one part of this opportunity.

The idea is we'd sale our house, I expect about $50,000 profit after taxes, fees, etc. on the low end.  The garage is 859 sq feet, so assuming $100 per square foot for construction (I don't know how accurate that is)., we'd use a HELOC for the remaining $36,000 at about 4.8% for 20-30 years from our credit union. (We also may, get a larger credit line, then sell the house, and then payback part of the HELOC with that). Their mortgage payment has 12 years left and we'd pay half of that to my parents directly, along with half of the home insurance, and property taxes.  One advantage of Texas is that property taxes will be locked in while it is in their name. 

Four stipulations we made to my parents is that: 1.) house and property decisions would ultimately fall on us.  My wife and I are in our thirties and want it to feel like it is our own place.  That does not mean they don't get a say, but that we are partners.  2.) Except for shared laundry facilities, we do not enter the other's abode without permission.  3.) My sister would have the current value of the house minus any contributions I make reembursed upon my parents' death either from inheritance, life insurance, or if necessary, we will make up the payment.  Also clear title will pass of the house to my wife and me upon their death, and that my sister understands this beforehand and is okay with it.  Ruined family relationships is not worth it imho.  4.) We need to give the property some kick ass estate name. 

Advantages:
Lower housing costs - from about $1300 for us to about $450-625, and half of what they pay.
We love the house and the property and wanted something with a more rural feeling.
The outdoors.  In addition, with more to do on the property it'll be harder to justify "fun spending" because we're bored.  Our kids (9,5,2) hardly watch t.v. but are always outside playing sports or in the yard.
Being able to take care of parents and also helping them with their last wishes.
They've offered to babysit and do daycare.
We're all on board with ideas and are being clear on our expectations.
Better public schools

Neutral
Energy Costs and Insurance - It should be lower if we can bundle auto, and energy costs will be halved, but will also have to light up 800 new square feet.  It's well water.  We'll call it neutral.
No biking to work, but we can carpool.  To me the time is important.
Size - Our house is 3/2/2 and 1750 square feet.  This house is 3/2/2 and 2300 square feet.  So, we do want another bedroom, but with more square footage, we should feel less cramped. 

Negative
It's an older home.  Most of it has been renovated, but it's an older home . . .
I hate moving.
Four grown adults on the same land with strong personalities.
If for some reason we need to move far (my wife and I are in education, but it could happen), we lost some of that flexibility and immediate equity. 
The financial risk of going HGTV crazy with new property.
Although, it can be nice to spend parents' final years, it is also a lot more prominent.  Also, we would be caretakers of them.
My sister.

So, what are your thoughts?  Suggestions?  Also, any recommendations on converting a garage into a suite? 

I'm interested in hearing it either way.

Mrs.Piano

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Re: Sending my parents to the garage . . .
« Reply #1 on: October 24, 2018, 10:53:52 AM »
Your sister would get the *whole* current value, not half? And you plan on doing all of this spending without the house being in your name?

frugaliknowit

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Re: Sending my parents to the garage . . .
« Reply #2 on: October 24, 2018, 11:04:20 AM »
My $0.02:  Too much has to go right and too much can go wrong. 

ShoulderThingThatGoesUp

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Re: Sending my parents to the garage . . .
« Reply #3 on: October 24, 2018, 11:07:15 AM »
Why donít you instead set them up closer to you? A couple acres is a lot of work, and if itís that close to a significant workplace in FW it is probably worth a good deal now.

canisius

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Re: Sending my parents to the garage . . .
« Reply #4 on: October 24, 2018, 11:08:38 AM »
Your sister would get the *whole* current value, not half? And you plan on doing all of this spending without the house being in your name?

To be more specific, it would be the current tax appraised value minus the remaining mortgage.  Thus we receive the real estate asset and she receives something more liquid.  We could move it to our name, but then we lose the Property tax freeze and the lower 3.5% interest rate on the mortgage.  All in all, that would cost us about $10,000 annually.   

AMandM

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Re: Sending my parents to the garage . . .
« Reply #5 on: October 24, 2018, 11:12:22 AM »
I think this sounds like a dream opportunity!  Given that you say
Quote
We're all on board with ideas and are being clear on our expectations.
which is the most important factor of all.

The advantages are profound and long-lasting, while many of the negatives are less important: transitory (moving), uncertain(the possibility of moving in the future), or avoidable (HGTV fever).
Personally, I would count an old house as a neutral or even a positive, depending on whether it's old enough for the design to be handsome or charming.
I would not worry about the four strong personalities if your relationship with your parents is as strong as the quote above suggests.

The caretaking could also be seen as a plus ("We've always offered to take care of them when they got older as long as we viability could"). I think this is one area where you need more discussion among you & your wife, your sister, and your parents, regardless of where you all live. What are their goals and priorities for their care? How much time are you/your wife/your sister/other people able to give to caring for them? Are there other resources they expect to tap into? The end of life care that my grandmothers and my husband's grandmother received from various relatives was an immense blessing both to the receivers and the carers, but it required enormous gifts of time and energy.

Why do you list your sister as a negative?  That would seem to count against the "we're all on board."  I totally agree that this plan is not worth ruining your, or your parents', relationship with your sister. Apart from that, I envy you this opportunity!

bacchi

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Re: Sending my parents to the garage . . .
« Reply #6 on: October 24, 2018, 11:13:26 AM »
Put it in writing.


eta: Oh, and $100/foot? You're dreaming unless you're doing some of it yourself.
« Last Edit: October 24, 2018, 11:28:01 AM by bacchi »

Car Jack

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Re: Sending my parents to the garage . . .
« Reply #7 on: October 24, 2018, 12:52:24 PM »
I think you're making complicated things about as complicated as possible.  Sorry.  Both my mom (82) and father in law (86) are at ages that sound like your parents.  Both their plans and what we think is best is that they find assisted living or a place with the possibility to add assisted living facilities nearby.  Why?  Because taking care of debilitated parents can take up your entire life.  We just moved an aunt into one and it took years and work with her doctor and attorney.  It's worlds better and you know what happens if she falls and I'm half an hour away at work and my wife is an hour away picking up one of our sons?  The staff right there are helping her in minutes.  Anything needed can be taken care of.  On staff nurses can get medical work done.

I don't know how old your parents are and maybe I'm getting it wrong.  I do understand that MMM people seem to think someone 50 is ancient and ready for the reaper (I'm 61 and very much notice that around here), so if your parents are more like 55, then heck.....tell them to go get 3 jobs and bring in some real money.  :D  Maybe not, but if they are in their 60's, they can certainly fend for themselves where they are for another 15-20 years.  Get off my lawn!

Frankies Girl

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Re: Sending my parents to the garage . . .
« Reply #8 on: October 24, 2018, 01:05:28 PM »
Hell no.

Moving farther away, to a property owned currently by your parents as "their" home, older home that needs lots of fixing up to make you and the spouse happy, would have to build an in-law suite from scratch, AND they're both in poor health and will need care - especially more hands-on within a few years as it stands? And you have a sibling that potentially may be hurt/upset/furious about the way money/property inheritance shakes out?

And the value of that property may be screwy when you consider the appeal of a added into a older/dated house garage rehab to make an inlaw suite on a few acre plot... that's not going to be valued or sold easily as multi-gen living tends to be limited appeal unless it's done really, really well and has the potential for renting out for B&B or something. I for one am looking currently at hobby farm types of properties and can't tell you how much of an instant turn off it is to see those garage conversions or worse, the double or single wide mobile homes plopped down awkwardly next to an otherwise "good bone" house.

Good luck getting paid care/medical help to come out if it is a ways out, so that will fall on you and spouse. This is not something you can do and work full time, so one of you will become a full time care-giver. And that is a HEAVY burden, which would need to be paid and could also complicate the relationship between you and them and sibling...

And I agree that $100/foot for construction - especially on a property that is any distance from city/town? You are seriously underestimating and it will take well over double or triple the time you think it will.

Nope, no, niet....


What I would do if it was me: search out a duplex or multi-gen home in town, closer to your work/medical facilities. You and spouse buy and own it 100%. You live in one half, parents live in other and pay you nominal rent. They sell acreage property and invest it for their own care. If you eventually outgrow the duplex or once the parents are unable to live independently they move into care facilities, and you get the added bonus of renting it out and making $$.

You don't over complicate things for your sibling, parents or yourself.
« Last Edit: October 24, 2018, 04:29:56 PM by Frankies Girl »

chasingthegoodlife

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Re: Sending my parents to the garage . . .
« Reply #9 on: October 24, 2018, 01:39:15 PM »
I have often seen these sort of arrangements go wrong (I’m a social worker).

What will you do if five years from now your parents need or want to move into assisted living? Will you be in a position to pay them out for their part of the property? Would you be able to rent it out to someone else?

Have you and your wife talked about who will quit work to take on a caregiving role?

I see a lot of elderly people whose money is tied up in the kind of living situation you describe, which works well for the first few years and then gradually becomes problematic as their health declines and they need more support than their children can comfortably provide but they can’t move without displacing their children and grandchildren as the children can’t afford to pay them out and maybe couldn’t afford another property without mum and dad’s equity.

Be aware of how the assets in their name will affect their eligibility for services too.

If you already owned the home outright and were offering them rental of a basement unit I would say go for it, but your current plan has a lot of red flags for me.

Do they still drive? If so, also consider how they will feel living out of town when they’re no longer able to and you and your wife are gone all day.


SwordGuy

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Re: Sending my parents to the garage . . .
« Reply #10 on: October 24, 2018, 02:26:09 PM »
No way.   Not if you want to stay married.

The bad things could be really bad and the good things merely nice.

To me, this deal is like playing Russian Roulette for $10,000 a year.   It's nice if you win, the odds are even in your favor, but if you lose, you lose big.
Only, in this case, I think 4 of the 6 chambers have bullets in them, so the odds aren't even in your favor.

And remember, a will is only one sob-story from your sister away from being changed.  You could be care-givers for 10 years, ruin your marriage and relations with your parents, and then get stiffed on the house.

mm1970

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Re: Sending my parents to the garage . . .
« Reply #11 on: October 24, 2018, 02:55:39 PM »
The four posts above mine said all the things.

It seems incredibly complicated.  Many chances of things going wrong.
It might be the best thing ever.  You get to hang with your parents, they get to be close to the grandkids, you end up with a house you love with a low tax basis, your sister gets cash.  It might also be a nightmare.

It seems messy.

When my spouse's paternal grandparents got to be of "that age" where they needed more help - they sold their house to their kids.  Then, when they needed  more house, the kids sold the house.  My in laws used their half to buy a smaller home closer them, and moved the grandparents in.  I don't think the grandparents were paying rent, but I think that's because the grandparents sold the first house to the kids for $1.

Anyway, less mess this way because my in laws owned the house and didn't have to deal with older/ cranky/ dementia-riddled parents making bad decisions when it comes to the home.  When it came time for the grandparents to go into a home (the wife lived to be 97 and was in the home for 15 years!) - it was reasonably easy to do so.

Not to say it will go bad, just that the mixing seems really messy.

Sibley

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Re: Sending my parents to the garage . . .
« Reply #12 on: October 25, 2018, 08:48:56 AM »
Either this goes really well, or it destroys your life. And I'd put the odds at 25/75 respectively.

If your parents can't handle their home/live independently, then the answer isn't to complicate your life and destroy your marriage to live in a home you don't love. The answer is that your parents sell the whole property and move somewhere appropriate for them. Senior apartments exist for a reason.

zolotiyeruki

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Re: Sending my parents to the garage . . .
« Reply #13 on: October 25, 2018, 09:28:18 AM »
There's an old adage about not doing business with family.

I haven't done a garage conversion myself, but off the top of my head I'm not sure how much money it would save you, compared to just building a new small house.  You have to jackhammer the slab to install plumbing, which would add cost.  You'd probably have to add windows to meet code, punch holes in the roof for plumbing vents, maybe punch more holes for HVAC exhaust, etc.  So you're redoing some framing, redoing some roofing.  I'm guessing the garage isn't insulated.

So by doing the conversion, you save some of the framing cost, some of the cost of foundation, and some of the roofing cost.  And you add cost by having to add plumbing to an existing slab.  And in the process, you're constrained to the footprint of the garage.

It sounds like your parents are willing to move, but have emotional ties to the house and land.  I agree with other posters that (emotions aside) having your parents move closer to you and sell their property is a smarter choice.

Another Reader

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Re: Sending my parents to the garage . . .
« Reply #14 on: October 25, 2018, 09:42:19 AM »
Your parents are going to need care soon because of their health.  Unless you or your wife want to quit and become a caregiver to your parents, your plan will not work.  Add in dementia and 24/7 supervision and care, and it can't work.

The property needs to be sold.  Your parents could choose a CCRC if they can qualify and have the assets.  Otherwise, a senior apartment near you while you scope out what assisted living situations will be affordable and available when they need them. 

By the time you get the garage conversion done, your father could be too ill too live there.  Stage three kidney disease can be debilitating.  It gets worse as the disease progresses. 

The family complications are best avoided as well.

canisius

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Re: Sending my parents to the garage . . .
« Reply #15 on: October 25, 2018, 10:00:17 AM »
I appreciate all the responses and will get to them one by one. 

One thing I want to clear up, that I see as a misconception is we don't like the house. 

We do like the house and property (I grew up on it when it had some small ranching growing up) and have been wanting a more rural environment for years and moving.  Rather, to be clearer, my concern was that the house is older than our current one.  However, with our budget, that is honestly about all we'd get anyways with land, unless we want to go mobile . . . and we don't . . .

Also, I appreciate the mentioning on looking at a separate living quarter on the property as well as keeping in mind quality of life.  I'll get back to the others, later.

nessness

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Re: Sending my parents to the garage . . .
« Reply #16 on: October 25, 2018, 10:40:11 AM »
When you say they're going to do daycare, do you mean full-time for your 2-year-old? Are you confident that they have the physical and emotional energy for that? Do you have a back up plan if it doesn't work out?

I would definitely recommend talking through expectations about what will happen when they need a greater level of care than you can provide while working. If they think one of you is going to quit their job to take care of them (or just totally have their heads in the sand about this), while you're expecting them to hire someone or move into assisted living, it will be a lot easier to hash that out now than when you're already living in their house.

Unlike some PPs, I don't think this is a terrible idea, and it's the norm in a lot of cultures. But the more you can get on the same page ahead of time, the better.