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.
I am in the process of buying a home (in cash). I’m a single 40 year-old adult man without children. I’ve lived in one bedroom apartments the last 20 years. So, I don’t need much space. I've been shopping for smaller housing options: condos, townhomes, and duplexes. (If I were to marry and have kids: a smaller place would be fine for at least the next ten years).
I like one particular duplex that just came on the market a few weeks ago. It has 2 BD/1BA on each side, and has both sides vacant. I could live on one side of the duplex; the other side could be rented out. The duplex layout is an L-shape on the corner of a street (the two garages/driveways and entrances are on separate streets). So, the tenant and I wouldn’t be seeing each other every time we come & go.
Instead of renting it out, I have another plan: I will invite my elderly mother to live in the other unit without charging any rent.
My 70 year-old mom receives monthly Social Security, but she still works part-time to get by in her own apartment. She was a single mom and worked low-paying jobs for the last thirty years with no retirement accounts.
Most of her pay checks went to feed, clothe, shelter and support me through high school and college. She has no emergency savings. I know she owes about $4,000 from recent medical bills. I’ve offered to help, but she politely says she is managing. However, her car died a few months ago and she now takes the bus instead getting a car loan. (I’d give her rides, but she currently lives 25 miles away).
By letting her live rent free in this duplex unit, she could save her rent money & pay checks to buy herself a reliable car, pay-off debt, build savings, and splurge on things she’s been dreaming of.
My mom has her own life, friends, and hobbies. She doesn’t interfere or drop-in unannounced. We wouldn’t see each other unless walking to the other side of this particular duplex. Definitely not a visit every day. This living situation would only work in a duplex. If I purchased a condo or a single family home, I wouldn’t invite her to move in (and she probably would say ‘no thanks’). We both like some privacy.
I haven’t yet mentioned my plan to her. No point in raising possibilities that could easily fall-apart (another buyer outbids me, structural issues, etc.). In that case, I would search for a similar duplex on the market.
I would pay all property taxes, yard care, maintenance, and water/sewer/garbage. She could pay for her own electricity & gas (duplex has separate unit meters) and her own cable/internet/phone services that she wants.
I think it would be a good idea to have a landlord-tenant contract stipulating terms (including $0 rent) even though we’re family. Just in case ten years from now she is unable to live alone safely or I need to sell the duplex: I could legally give her notice to vacate without it appearing that I’m kicking-out my homeless mother.
What other contractual terms should I include in the rental agreement? Please share advice that I should consider before "renting" to a family member. Thank you.
You can still use the rent proceeds for Mom if she needs anything.
She doesn't accept money from me. I can give her things like a three-day Vegas getaway trip for her birthday and she will accept it, but not cash or a car. I feel she would be open to this situation (a rent-free duplex).
Since it is your mother and given the layout you describe, I think it would be OK. Think about if she gets a boyfriend, or wants to have friends stay over, or wants a roommate or lets someone from church get back on their feet by living with her, or has the grandkids all the time, etc. Address those issues in your lease.
Go ahead and make your bid to buy the duplex (with an option period so you can back out!). If you win it and you are happy with the inspection, tell your mother about it. I don't think you need a formal lease; I do think if you just did a written residential agreement and stipulate such things as: how much she can alter her place (paint, covered patio, etc.) pets, lawn care, repairs, utilities, and if only she may live on her side as a single woman. If you died suddenly, would she be the owner? If that happened could she afford to live there? Would you get some cheap term life policy to cover the mortgage just in case? Even without a lease you can evict someone, so a lease may or may not be a good idea depending on her reaction. What a nice gesture. I really don't think this is the same situation as leasing to family because you are not depending on her to pay anything and I think its a great idea.
If you died suddenly, would she be the owner? If that happened could she afford to live there? Would you get some cheap term life policy to cover the mortgage just in case?
I would be paying for the duplex in cash (no mortgage). But good point: If I died, she would need to pay the property taxes and maintenance expenses. Her monthly Social Security would cover it in the short-run. Maybe she could rent out my vacant unit (or let a property management company do it for her)? Or just sell the duplex. I will list the duplex in my will / trust. Thanks for sharing.
I would do it with a lease. Include no deposit and make the lease the same as if she were NOT related. You also need to make arrangements for the disposition of the building if you die first. I know kids are not supposed to die first, it happens. Give her the option and make sure she understands it a free rent leased apartment.
I did it for my sister and it has worked very well with a lease and stipulations in the lease.
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.
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.
