Author Topic: Help Family Member Buy House  (Read 1058 times)

Cmdm

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Help Family Member Buy House
« on: July 23, 2020, 03:56:02 PM »
I am considering helping my sister in law purchase a home in the Austin, Texas area.  She is 33, has a good stable job, and good rental history.  However, due to spending issues that she has finally addressed she has not been able to save for a home. She is worried by the time she has saved enough the prices will have skyrocketed so much that she cannot afford anything decent.  She also wants to get in now while rates are so low.  Although she makes close to $70k, since she does not have a college education/specialty trade I doubt her income will increase enough to keep up with the Austin housing market.  She does have $10K that she would like to contribute to the purchase of the home, which I do not necessarily think is a good idea as she would then have no emergency savings.  We are looking at homes around $275k. She plans to get a roommate and will be able to finally save (even without the roommate she could just make the mortgage). The plan is that down the road I would sell her the house at a more reasonable price then the current market.  For instance, in in 10 years the house is worth $375k, I would sell for perhaps closer to $340k.

I want it to be advantageous for both parties.  I realize selling to her for under market value is not great for us, but there is added security knowing that she is very meticulous and will take good care of the property.  She understands that as things come up she will need to handle them.  I live in WA so getting into the Austin rental market would be very challenging unless it was with someone I knew.   SOOOO....I am looking for some advice on how we should set up this arrangement.   I haven't figured out the numbers/ a formula once so ever.  She has also brought up buying more of "starter" home as co-owners and then selling in ten years or so and dividing the proceeds.  However, I believe she thinks the money she pays as rent is her equity when selling, and obviously that would not work out very beneficial for me.  Any thoughts/suggestions will be appreciated.

Freedomin5

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Re: Help Family Member Buy House
« Reply #1 on: July 23, 2020, 04:13:23 PM »
Can you just give her a loan with a low interest rate to help her with her downpayment that she can slowly repay? That's the "cleanest" way of doing it, as her home would then only be in her name, and she wouldn't have to depend on the whims of a sibling-in-law for her place to live. You would earn a bit of interest.

If I were in her shoes, I would not want my in-law co-owning my home, because if there is a falling out, they would be liable to sell my house. If I wanted to get into the Austin rental market, I would not do it with your SIL, who sounds like she wants to own her own home. I would ask her where she would move to, help her with her home, and then buy a similar property in the same neighborhood to rent out.

Abe

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Re: Help Family Member Buy House
« Reply #2 on: July 23, 2020, 10:11:22 PM »
Option 1: She should move to a lower-cost neighborhood until she has enough savings to afford a down payment. Buy a house on her own then. It is unlikely mortgage rates will increase substantially in that time period. If she makes a good faith effort over 1-2 years to save a large amount, you could reconsider.

Here are some examples to illustrate (assuming 20% down):

3.0%: $927.53 monthly payment
3.5%: $987.90    ($60/month extra, or 1.2% of her monthly income)
4.0%: $1,050.31 ($122/month extra, or 2.5% of her monthly income)
4.5%: $1,114.71
5.0%: $1,181.01

Post-financial crisis, the last time rates fluctuated more than 1.0% higher than current levels was in 2009.

From 1990 onwards, there has been no period in time since 1978 that rates fluctuated up more than 1.0% (except when rates briefly fluctuated up and down 1% in 2003-2004).

Source: http://www.freddiemac.com/pmms/pmms30.html
Option 2: If you have money to burn, give her a loan for the down payment, but do not expect repayment. Otherwise you are asking for trouble. From my family's personal experience (had money to burn, it was burnt).

Monerexia

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Re: Help Family Member Buy House
« Reply #3 on: July 23, 2020, 10:59:20 PM »
If it were me: No and no and no and no and no. Did I mention NO. This is a dual relationship nightmare waiting to happen. Let her seek conventional financing in her price range. No and no and no. NO. YMMV and good luck!

Monerexia

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Re: Help Family Member Buy House
« Reply #4 on: July 23, 2020, 11:08:37 PM »
If it were me: No and no and no and no and no. Did I mention NO. This is a dual relationship nightmare waiting to happen. Let her seek conventional financing in her price range. No and no and no. NO. YMMV and good luck!

And did I mention no? Like I would rather be hit by a car on a cold winter night and die looking up at the sky with my bones poking out of my skin than do anything remotely close to what you're suggesting here. That, of course, is just me haha.

FINate

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Re: Help Family Member Buy House
« Reply #5 on: July 23, 2020, 11:28:19 PM »
How do you feel about gifting tens of thousands of dollars to your SIL? That's essentially what you'd be doing once time-value of money is considered (money tied up in a house for years that doesn't pay any returns). And this is best case scenario assuming she doesn't trash the place, walk away, and/or ruin your credit and it sells for more than the purchase price.

My advice: If you're feeling generous then gift her cash for the down payment. She buys it, she owns it. You are not owed a dime, nor are you liable for any of her actions. Clean and simple.

But you shouldn't feel compelled to help. She doesn't *have* to live in Austin. Oh, sure, I'm sure there are lots of reasons she thinks she has to live there. Believe me, having lived in a very HCOL area I've heard them all. Seriously, it's a free country and there are a ton of great places to live for less. If she really cannot afford a house, and if prices keep going up (a big 'if' - really, who knows?), then she's better off relocating to a place she can afford sooner rather than later. Helping people stay in places they cannot afford hurts them in the long run.

Frankies Girl

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Re: Help Family Member Buy House
« Reply #6 on: July 24, 2020, 01:11:52 AM »
The conventional wisdom is that you shouldn't attempt to purchase a home that exceeds more than 3X your salary. At $275k, this is over that maximum amount.

If she was looking at houses in the 100-150K range and THEN getting a roommate, that makes more sense but still likely to be a suboptimal deal for you.

She also does not understand basic savings if she only has 10k after earning 70k for more than a year. She also is proposing a really bad
investment idea with that split that shows she doesn't understand how loans/equity and all that stuff work either.

Does she understand the cost of property tax, maintenance, the "joys" of having a roommate, do or hire lawn care, the need to not only be responsible for anything that breaks down or needs fixing up but the chore of finding one, getting estimates, pricing things out, and the budgeting for all that fun? And Texas is the land of the HOA - she'll need pay THAT fee yearly as well, and there will be restrictions to make sure the house is up to HOA standards. And homeowner's insurance? It's not going to be a few hundred a year in Texas in a big city burb.

If she wants a house, let her figure it out. Gift her a few thousand towards her downpayment if you care about her that much. If you want to invest in houses, do so with someone you're not related to or go by yourself. Do not entangle your finances with family unless you are both completely in sync with your money management styles. This is not that case, and the chances of it going horribly wrong or having misunderstandings/hurt feelings, losing a not insignificant amount of money and ruining your relationship is more likely than things working out perfectly.
« Last Edit: July 24, 2020, 01:15:46 AM by Frankies Girl »

Monerexia

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Re: Help Family Member Buy House
« Reply #7 on: July 24, 2020, 02:07:27 AM »
The conventional wisdom is that you shouldn't attempt to purchase a home that exceeds more than 3X your salary. At $275k, this is over that maximum amount.

If she was looking at houses in the 100-150K range and THEN getting a roommate, that makes more sense but still likely to be a suboptimal deal for you.

She also does not understand basic savings if she only has 10k after earning 70k for more than a year. She also is proposing a really bad
investment idea with that split that shows she doesn't understand how loans/equity and all that stuff work either.

Does she understand the cost of property tax, maintenance, the "joys" of having a roommate, do or hire lawn care, the need to not only be responsible for anything that breaks down or needs fixing up but the chore of finding one, getting estimates, pricing things out, and the budgeting for all that fun? And Texas is the land of the HOA - she'll need pay THAT fee yearly as well, and there will be restrictions to make sure the house is up to HOA standards. And homeowner's insurance? It's not going to be a few hundred a year in Texas in a big city burb.

If she wants a house, let her figure it out. Gift her a few thousand towards her downpayment if you care about her that much. If you want to invest in houses, do so with someone you're not related to or go by yourself. Do not entangle your finances with family unless you are both completely in sync with your money management styles. This is not that case, and the chances of it going horribly wrong or having misunderstandings/hurt feelings, losing a not insignificant amount of money and ruining your relationship is more likely than things working out perfectly.

Exactly. For example, back in the day I was making 90K and bought a condo for $74K.

Dicey

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Re: Help Family Member Buy House
« Reply #8 on: July 24, 2020, 08:50:48 AM »
If it were me: No and no and no and no and no. Did I mention NO. This is a dual relationship nightmare waiting to happen. Let her seek conventional financing in her price range. No and no and no. NO. YMMV and good luck!

And did I mention no? Like I would rather be hit by a car on a cold winter night and die looking up at the sky with my bones poking out of my skin than do anything remotely close to what you're suggesting here. That, of course, is just me haha.
NO, it isn't just you.

Kl285528

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Re: Help Family Member Buy House
« Reply #9 on: July 24, 2020, 09:21:27 AM »
If it were me: No and no and no and no and no. Did I mention NO. This is a dual relationship nightmare waiting to happen. Let her seek conventional financing in her price range. No and no and no. NO. YMMV and good luck!

And did I mention no? Like I would rather be hit by a car on a cold winter night and die looking up at the sky with my bones poking out of my skin than do anything remotely close to what you're suggesting here. That, of course, is just me haha.
NO, it isn't just you.
I will pile on with the rest - NO.

NonprofitER

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Re: Help Family Member Buy House
« Reply #10 on: July 24, 2020, 10:40:42 AM »
I live in Austin, TX. It is a very hot market, and has been since about 2012/ 2013.
$275k home is not a good plan for someone in this city who makes $70k. Planning [requiring?] a roommate in order to make the payments is also not a good plan.

Property taxes in ATX are astronomical (property taxes in all of TX are high, to compensate for our lack of income tax). Once you factor in mortgage, insurance and property taxes (let alone maintenance costs, furnishing costs, etc.), your SIL will quickly find it even more difficult to save. Her best bet would be to live with multiple roommates for a couple of years to save more money.  I know that's not what she wants, but its the truth. The current plan would leave her very stretched, and wouldn't likely leave you in a good position.

pbkmaine

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Re: Help Family Member Buy House
« Reply #11 on: July 24, 2020, 03:46:14 PM »
Nope nope nope nope nope.

cchrissyy

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Re: Help Family Member Buy House
« Reply #12 on: July 24, 2020, 04:06:56 PM »
She is worried by the time she has saved enough the prices will have skyrocketed so much that she cannot afford anything decent.  She also wants to get in now while rates are so low. 

if later turns out to be a bad time to buy, cool, she doesn't have to buy. people do not have to buy a house, ever.


as far as terms of your deal, count me as NOPE unless you want to make a direct gift to her downpayment. that's nice. but no entanglements.

Seahorse

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Re: Help Family Member Buy House
« Reply #13 on: July 24, 2020, 05:00:33 PM »
I want it to be advantageous for both parties.....

She has also brought up buying more of "starter" home as co-owners and then selling in ten years or so and dividing the proceeds.  However, I believe she thinks the money she pays as rent is her equity when selling, and obviously that would not work out very beneficial for me. 

There's no way this will be advantageous for you. Her? Yes. You? No.

First, Her money values are wrong if that's all the savings she has. Even if she fixed her spending habits, she needs to work on her savings habit. Delayed gratification is hard to learn - she has a great opportunity here. I think any financial help you give will be enabling her to slide back on financial education and is messing with her learning process. The biggest help you can do, is not get involved.

That bolded text is totally entitled behavior. SIL's Financial partner qualification - FAIL!


SunnyDays

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Re: Help Family Member Buy House
« Reply #14 on: July 24, 2020, 05:22:12 PM »
Don’t do it!  She’s not yet shown herself to be worth that kind of financial largess.  Let her rent for another 5 years and if she can save a substantial amount in that time (like 50K) then you could consider helping her, but even then, I would not.  Owning a house is not a need, but a want.  Personally, I don’t provide other people with their wants.  If she ends up being priced out, so be it.

SwordGuy

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Re: Help Family Member Buy House
« Reply #15 on: July 24, 2020, 09:07:28 PM »
No one who doesn't want to be foreclosed on should buy a house that costs that much more than what they are making.

I suggest you flip the scenario.  Have her rent a room in someone's house for a few years and save a bunch of money.   If covid causes a bad recession prices will drop.  If it doesn't, she an explore getting a job in a lower cost of living city and she'll have a nest egg.   If you want to gift her something, match her down payment contribution (up to $X ).   (If you go that route, you need to do the match 2 statement cycles before she puts in an offer.)

Don't help people more than they are willing to help themselves.   And this way you'll both know she'll put up with a roommate situation for financial gain instead of tossing them all out and then asking you for a bailout 'cause she can't make the mortgage...

Jon Bon

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Re: Help Family Member Buy House
« Reply #16 on: July 25, 2020, 07:04:39 AM »
This feels pretty perfect for an FHA loan?

Not sure all the ins and outs, but it specializes in first time buyers people just like your sister.

Really low DP requirements, and if she defaults on payments not your monkeys, not your circus.

ender

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Re: Help Family Member Buy House
« Reply #17 on: July 25, 2020, 09:37:27 AM »
This strikes me as an idea with very little upside and significant downside.

In order for this to be worth the risk to you, imo, it's going to require an arrangement which isn't beneficial to your sister.

The reality is, making $70k and buying a nearly $300k house with zero down is a bad idea.

Frankies Girl

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Re: Help Family Member Buy House
« Reply #18 on: July 25, 2020, 02:28:24 PM »
I'd like to highlight what @NonprofitER mentioned regarding property taxes too because I think people that are not familiar with Texas (or other really high Ptax states) won't get this.

Texas has no state taxes, so they charge REALLY high property taxes for school, county, and utility district (Austin may have others). On a house that the P&I may run ~$1000, expect to pay at least (like the bare minimum and Austin is pricey so this is likely grossly underestimated) $600-800 each month for taxes if you're escrowing or else be prepared to pay out of pocket both taxes and insurance at different times of the year.

Homeowners insurance is also usually escrowed, so add another  $50-100/monthly (parts of Texas are really high to insure because of hurricanes/flooding/tornadoes).

HOA (if you live in a burb in Texas there is going to be an HOA most likely) another 200-500+ yearly (not sure this can be escrowed, usually paid directly to the HOA management company).

And if you don't put the full 20% down, PMI (private mortgage insurance) at least another $20+ monthly.

So that $1,000 mortgage payment suddenly becomes a $1,800+ payment.

And that is before you even consider the higher cost of utilities for a house, cost for upkeep and covering when the HVAC goes out or need the water heater replaced.

You can actually see payment info and play with the numbers if you look at homes on realtor.com - they have a payment estimator (with approximates filled in based on county tax records, but it defaults for a 20% downpayment so need to adjust if that's not going to be the case).



« Last Edit: July 25, 2020, 04:40:21 PM by Frankies Girl »

iluvzbeach

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Re: Help Family Member Buy House
« Reply #19 on: July 25, 2020, 03:15:47 PM »
As others have said, the price you mentioned is way out of her abilities based on current income. And, I would not at all feel comfortable with needing a roommate to afford the payment.

We moved out of Austin a few years ago and the property taxes on our $400K house were $6,000 - $7,000 per year and our homeowners insurance was $2,200 (no claims ever.)

I do not see any way your SIL can afford this on her current income. I would strongly suggest she continue to rent, focus on saving and increasing her income. The Austin job market pays extremely well, even without a college degree. She can easily make double what she’s making (then save even more), if she applies herself. I know from personal experience from having lived there and not having a degree.

Let her figure out how to do this on her own. Everyone involved, and the relationship, will be better for it.

Fishindude

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Re: Help Family Member Buy House
« Reply #20 on: July 26, 2020, 07:13:10 AM »
Sounds pretty dumb to me.   If you simply want to gift her some cash for her to utilize as a downpayment to get a place and / or possibly even co-sign for her that would be much more reasonable than buying the place.
I also think a $275k home is way too much home for a person making $70k.   Roommates come and go and can't be counted on as a payment source for the duration of a mortgage.

Sibley

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Re: Help Family Member Buy House
« Reply #21 on: July 26, 2020, 08:38:29 AM »
If you want to lose a bunch of money, damage/destroy relationships, or see her financially ruined, sure, go for it. Otherwise, nope.

former player

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Re: Help Family Member Buy House
« Reply #22 on: July 26, 2020, 10:05:51 AM »
I'm not saying it's a good idea for OP to go into the arrangement suggested, and in fact I'm fairly sure it's not, although there may be other arrangements to be made which would work out better for both parties, financially speaking.

I would like to push back on the issue that spending so much on that salary is always going to be a bad idea, though.  Perhaps its a USA thing where you just carry on building suburb after suburb and put your costs into car commuting instead?  I bought a house in London at a salary multiple not much less than the one proposed here and with a similar size of deposit.  I also did it with something that would be anathema on the boards: I had a variable interest mortgage.  That purchase, a long time ago, is a considerable part of what has made me more that comfortably fat FIREd now.  With a solid job, frugal habits and good promotion/salary increase prospects it can work out very well.  In a HCOL area spending only one or two times your salary on buying a home just isn't realistic and renting for life can mean insecure and unsatisfactory housing, so the alternatives can be even worse.  These financial realities hit even harder for someone like OP's sister who isn't in a two income household.   I'm not sure that this reality has made its way into the views of some here who aren't familiar with the high housing costs in some places these days.

(Now cue the haters who will say "rent all your life" and "move somewhere cheaper", quite possibly from the comfort and financial security of a house they bought for cheap a while ago while in a two income household.)

Dicey

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Re: Help Family Member Buy House
« Reply #23 on: July 26, 2020, 10:51:54 AM »
I'm not saying it's a good idea for OP to go into the arrangement suggested, and in fact I'm fairly sure it's not, although there may be other arrangements to be made which would work out better for both parties, financially speaking.

I would like to push back on the issue that spending so much on that salary is always going to be a bad idea, though.  Perhaps its a USA thing where you just carry on building suburb after suburb and put your costs into car commuting instead?  I bought a house in London at a salary multiple not much less than the one proposed here and with a similar size of deposit.  I also did it with something that would be anathema on the boards: I had a variable interest mortgage.  That purchase, a long time ago, is a considerable part of what has made me more that comfortably fat FIREd now.  With a solid job, frugal habits and good promotion/salary increase prospects it can work out very well.  In a HCOL area spending only one or two times your salary on buying a home just isn't realistic and renting for life can mean insecure and unsatisfactory housing, so the alternatives can be even worse.  These financial realities hit even harder for someone like OP's sister who isn't in a two income household.   I'm not sure that this reality has made its way into the views of some here who aren't familiar with the high housing costs in some places these days.

(Now cue the haters who will say "rent all your life" and "move somewhere cheaper", quite possibly from the comfort and financial security of a house they bought for cheap a while ago while in a two income household.)
I have a similar story. One does things differently in HCOLAs and people in flyover country will never understand.* Still, I appreciate everything I have now, because it was a scramble all the way. I'm not sure i would have savored the sweetness quite so much if such a big chunk of it had been handed to me. Also, managing a house on a single income, even with excellent money habits, is difficult. The possibility of large, lumpy expenses is always lurking in the background, in addition to everyday care and feeding.

*No, I really don't expect them to, but I do wish they would STFU about how they would never spend over X amount, when X won't buy you a garage in a HCOLA. And moving is frequently not an option or even desireable. I like where i live and I've spent years growing roots in my community + family. Not giving that up.

FINate

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Re: Help Family Member Buy House
« Reply #24 on: July 26, 2020, 11:15:01 AM »
@former player I'm sincerely happy that things worked out for you.

I somewhat agree with you w.r.t. rigid housing cost formulas applied to HCOL areas.

However, we recently decided to "move somewhere cheaper" from an extreme HCOL area. We grew up there and owned our home outright, affordability was not an issue. But we did not see a future for our daughters there. As much as I'd like to believe they are geniuses with lucrative futures in tech, they are more likely of average intelligence/ability and I don't want them pigeonholed in a certain career path. The pattern of families that had gone before us was crystal clear: adult children desperately trying to make it in their hometown and generally failing to launch.

Saying "move somewhere cheaper" isn't a cold hearted hater thing to say. It's one of the most compassionate recommendations for those truly unable to afford a location. So many of the people I grew up with have struggled mightily to make ends meet. Working multiple jobs just to make rent/mortgage and put food on the table. Adding kids to the mix complicates things exponentially. This is a hardship in the short term but becomes tragic when folks hang on for too long and end up in mid-life with near zero net worth. Yet the the false "I could never live anywhere else" narrative continues.

Contrast this with those that moved away to less expensive locations who, for the most part, are thriving in their new locations. I don't mean going to the burbs. I can't speak to the UK, but in the US there are a large number of wonderful and less expensive metro areas to chose from. But this requires ditching the falsehood that every other location is a culturally backwards food desert.

IMHO, a HCOL area is worth it if you are compensated for the increased cost of living, or have a reasonable expectation of much higher compensation in the future, or are doing it for a period of time to build a career. Techies moving the the Bay Area for jobs that more than cover the 3x cost of living makes sense. But an accountant getting paid 25% more? Nah, much better off with an average salary in a LCOL or MCOL area.

former player

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Re: Help Family Member Buy House
« Reply #25 on: July 26, 2020, 12:25:10 PM »
@FINate, you were lucky that you could afford to buy in the HCOL area you grew up in, either because of high earnings or lower housing costs when you bought.  Unless your kids are going to be even higher earners (to account for even higher house costs) or you are prepared to set them up with enough capital to be able to afford housing on a less high income then your geographical arbitrage on their behalf makes a lot of sense.

The problem of course is that these HCOL areas still need the people on ordinary wages to keep them working, and they still need places to live.  In the UK there are requirements for any new residential development to include affordable housing either to rent or buy.  It helps to keep something of a social mix as well as enabling key worker and the low paid to live nearer the places they work.  It also keeps something of a community in place if it means the children of those key workers and low paid workers can also afford to stay in place. Whether it means the people in the middle, such as the accountant you reference, being completely absent from such locations in the future is something that time will tell - but current economic trends are not being kind to the lower end of the middle class.

FINate

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Re: Help Family Member Buy House
« Reply #26 on: July 26, 2020, 01:23:20 PM »
Oh yeah, for sure, our ability to afford the HCOL area was largely out of our control. I happened to be in a career that paid well to be there, and then happened to end up at a great company. What are the chances of something like that happening again for our kids?

Philosophically, as parents, we want our kids to make their own way in adulthood. We'll cover college, but after that we want them to figure it out without the Bank of Mom and Dad. We don't expect them to stay local in your new lower cost city, but at least it's an option.

Agree with HCOL areas needing people on ordinary wages, which is one of many reasons I don't understand the zero-growth "planning" of many places in CA. I was involved with a group there advocating for more housing of all types, including subsidized affordable housing. Progress, if you can call it that, was painfully slow. So slow that it was apparent that the time horizon for any meaningful change was well beyond my kids becoming adults. So in some ways we voted with our feet, though this isn't entirely accurate since there's a ton we really love about our new location.
« Last Edit: July 26, 2020, 01:45:11 PM by FINate »

Abe

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Re: Help Family Member Buy House
« Reply #27 on: July 26, 2020, 02:15:23 PM »
Oh yeah, for sure, our ability to afford the HCOL area was largely out of our control. I happened to be in a career that paid well to be there, and then happened to end up at a great company. What are the chances of something like that happening again for our kids?

Philosophically, as parents, we want our kids to make their own way in adulthood. We'll cover college, but after that we want them to figure it out without the Bank of Mom and Dad. We don't expect them to stay local in your new lower cost city, but at least it's an option.

Agree with HCOL areas needing people on ordinary wages, which is one of many reasons I don't understand the zero-growth "planning" of many places in CA. I was involved with a group there advocating for more housing of all types, including subsidized affordable housing. Progress, if you can call it that, was painfully slow. So slow that it was apparent that the time horizon for any meaningful change was well beyond my kids becoming adults. So in some ways we voted with our feet, though this isn't entirely accurate since there's a ton we really love about our new location.

I agree with all of your points. We're moving from SoCal to Texas for my job. The salaries are the same, but the cost of living is much less. This is primarily due to the large difference in housing costs. (Property tax makes up for lack of income tax in TX). My wife and I are in a very high pay bracket, and I have no idea how people paid middle-class salaries can afford a house. It's just out of control and no one can get anything done because "property values". Well, when a person's wealth is built on the suffering of low-wage employees, I guess they will justify anything to keep it just so. It's all a giant Ponzi scheme that will collapse eventually (literally or figuratively).

Back to the OP's question: housing markets change slowly. Interest rates also change slowly. Your SIL has plenty of time to do this on her own. There is no rush to buy anything in residential real estate ever.

Goldielocks

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Re: Help Family Member Buy House
« Reply #28 on: July 27, 2020, 03:50:23 PM »
Can you just give her a loan with a low interest rate to help her with her downpayment that she can slowly repay? That's the "cleanest" way of doing it, as her home would then only be in her name, and she wouldn't have to depend on the whims of a sibling-in-law for her place to live. You would earn a bit of interest.

If I were in her shoes, I would not want my in-law co-owning my home, because if there is a falling out, they would be liable to sell my house. If I wanted to get into the Austin rental market, I would not do it with your SIL, who sounds like she wants to own her own home. I would ask her where she would move to, help her with her home, and then buy a similar property in the same neighborhood to rent out.
Yep, this.  After she gets a mortgage, you put a second line mortgage on the home for the amount of your loan, that you clear when it is repaid or the home is sold.

Only do this with money that you have no other purpose for.