should I buy the land from my parents, build a home, and charge them rent? (tenant, incentive)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Hi all,
My parents currently pay about $600/mo in mortgage payments for 10ac of land in Texas (5 years paid of 25, thus far). I am thinking of buying it from them and paying for construction of a home on it in which they can live in full-time and that I can use as a vacation home twice a year. The home is going to be about 900+/mo (30yrs) and I am thinking of asking for 600/mo for rent (which is what they would have paid anyways for the land mortgage).
I plan to retire and move back to Texas and live in it after my folks are gone (or sell it and move elsewhere).
They are in their early 60s and I am 34.
Is this a good idea? I guess what I am asking is....what would be a good incentive for my parents to agree to go with this plan since more would go to rent in the long run than their retirement savings? Their house has been paid off (I'd say they will probably get 120k-150k for it). Perhaps rent should be decreased from 600 to 400 to make it more worthwhile for them?
Just looking for some clear thinking and advice from folks in this forum. Thanks.
What if they run into financial difficulty and cannot pay the rent, no matter how low you make it? Are you prepared to evict, or let them live there for free?
Hi all,
My parents currently pay about $600/mo in mortgage payments for 10ac of land in Texas (5 years paid of 25, thus far). I am thinking of buying it from them and paying for construction of a home on it in which they can live in full-time and that I can use as a vacation home twice a year. The home is going to be about 900+/mo (30yrs) and I am thinking of asking for 600/mo for rent (which is what they would have paid anyways for the land mortgage).
I plan to retire and move back to Texas and live in it after my folks are gone (or sell it and move elsewhere).
They are in their early 60s and I am 34.
Is this a good idea?
No. It isn't.
It's generous and kind and if all the stars align it might even work out...
but no, it isn't a "good idea". Not at all.
Quote:
I guess what I am asking is....
what would be a good incentive for my parents to agree to go with this plan...
Being threatened with eviction or foreclosure from facing/having 25 years of debt at 65.
Quote:
Just looking for some clear thinking and advice from folks in this forum.
For them? Sell the land as is and live in the paid for house.
It probably depends largely on what they want to do ... and whether you are looking primarily at the financial and utilitarian benefits to you ... OR to help them get into a better living situation than they can otherwise afford. If, for example, they paid $600 per month on the home for the next 20-years, would they gain any ownership equity? (or are you an only child?) ... OR what if one died and the other could no longer maintain the monthly payments?... OR if you 'needed' to dispose of the property? OR if your twice-yearly scheduled vacations weren't convenient or ??
I've seen situations where folks have purchased a home/condo for their older-than-60's parents to help them live in a home that they could not otherwise afford. These win-win situations benefited the parents and also served as an investment for the child (who would take-over the home after the parents left or died). These two situations worked-out very well ... BUT, there was no requirement that the parents pay two-thirds of the mortgage.
Once you add $600 monthly rent into the picture, it becomes a 'business transaction' ---which is better avoided, when it comes to family. (Optionally, instead of them contributing $600 per month to your house, why don't you contribute $300 per month to their house? .... just a perspective to help you think about this a different way).
I'm with Stan4. Let them have their land themselves or their free use of it from you, no strings attached. To do otherwise will invite bad dynamics, I would think. You might feel that it sounds good on paper but I think the emotions would be problematic, now or later.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
44,244 posts, read 80,460,275 times
Reputation: 57154
Quote:
Originally Posted by stan4
If it were me, I would just let them live there free.
Someone occupying the home and land is a good deal for you.
Then again, I wouldn't dream of charging my parents for anything.
I agree. In fact, we are considering buying my parents home on 5 acres, if we can get a variance from the minimum lot size and build a new house on it for us, and let them stay in theirs free as long as they can.
If it were me, I would just let them live there free.
Someone occupying the home and land is a good deal for you.
Then again, I wouldn't dream of charging my parents for anything.
This. They're your parents. You don't charge rent to family. First, it's a danger to social harmony. Second, you owe them your support as their kid. Third, it's tax inefficient -- that rent is taxable income, if they have under $5 million in assets and you don't live in an inheritance or estate tax state all you're doing is needlessly handing the feds money that would otherwise be kept within your immediate family.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.