Is This A Good Housing Arrangement? (Your Advice)

Your Advice - help answer readers' questionsWhen you must decide on what is a good plan of action which involves a housing arrangement outside the norm, it can be confusing and difficult to determine whether it is a good deal or not. That is the question that one reader has:

I have a financial question and hope you wouldn’t mind answering it for me. Here is the situation; My parents are building me a house with their own money on a 5 acre location, next door to their 5 acre location. I picked the design of the house that is being built and will rent it from my parents for $800 a month over 30 years. My parents will continue to have title of the house and land and pay all the annual taxes. All my parents properties are held in an estate to be shared with my only brother. Upon my parents deaths, the estate is set up so that my brother will get my parents house and 5 acres and I will get the house that I picked and am building on the other 5 acres. (This arrangement was made so I would move back to live near my parents, and they would live near their grandkids and I can help them stay in their home as they age). I am financially secure with a good job and credit. Both my husband and I are professionals in the work place and could easily buy a nice 3 bedroom home in a neighborhood if financially more desirable to do so.)

My question is this, is this arrangement with my parent detrimental to my immediate families financial future. In other words, I won’t own a home of my own and will only be paying rent -although the outcome of actually receiving title to the property is secured by the estate after my parents pass away, say in 20 to 30 years. I won’t be able to write off property taxes or home-owners mortgage interest on a loan when doing my federal income taxes each year.

Is this arrangement with my parents financially a good thing for me and my immediate family? What are the pro’s & con’s for me in this arrangement as you see them?

What is your opinion on this housing arrangement and what, if any, issues would you recommend that she pays special attention to with it?

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4 Responses to Is This A Good Housing Arrangement? (Your Advice)

  1. dan says:

    I think it’s a great alternative if the $800 is comparable to rent in your area. Writing off interest on your mortgage loan is minor to the savings you will have not carrying a mortgage in the first place. Instead, invest the money you would have placed on a down payment and your finances will be looking great.

  2. Spokane Al says:

    While many will weigh in on the financial aspects of your question my response goes more towards what you want and your own independence as an adult with your own family.

    Is this truly where you want to live? Will you be happy with your parents continuing to control your future and that of your family?

    I loved my parents deeply (they passed away a number of years ago) but I do not think I would have been comfortable in an arrangement of this type, and having to be forever beholden to them for their financial help. I am beholden to them for so many other things and I tend to believe that my thanks to them is my ability to go out and take care of a family and make it in this great world on my own two feet.

    What is the price we are willing to pay for our independence and the pride of making one’s own decisions vs. continuing to rely on our parents for the rest of our lives?

  3. Spokane Al says:

    I did have one more comment.

    Are you sure this is where you want to live for the next 30 years? What if job changes require a move? What if other life changes require a move?

    It seems a bit risky for both your family and your parents to sign on to a 30 year commitment without a good plan in case things change.

  4. This is horrible. If your parents were going to give you the land anyway, then they should give it to you now. Then you should get a mortgage and pay them back immediately. If they are worried about the land being sold, you should draw up a contract giving them or other family members right of first refusal if you sell. I would not want my parents or my in-laws as landlords and I can’t imagine that your spouse does either (although may be too nice to say so).

    Also, what if something horrible happens to your parents and they are in a lawsuit and all of their property is attached? There goes your home. What if you die? What happens to your spouses rights? What if? What if? What if? Never participate in rent-to-own on either end!!!!!!

    Whatever you decide, get everything in writing and make it legal.

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