These parents are buying homes for their kids…with strings attached

[Dash man]

We own two townhomes that we’ve allowed each of our two boys to live in with their families. The only string is to care for the place. They will gain title when we pass with a step up in basis. We pay the taxes and the HOA fees and they live there rent free. They can leave if they want and we’ll sell the places. Nothing has been promised about giving them the sale proceeds. We want them close but don’t tie them here. After seven and six years, neither has made any indication of moving. One got divorced, so not gifting the home to them paid off.

 

[Alan]

We gave our son the money to buy a house when he moved to England in 2017. No strings attached. We gave his sister an equal sum of money, she moved back 5 years later. We had decided to gift money to them for their use now rather than wait until they inherited.

 

[athena53]

I'm very glad I don't live in NNJ anymore. It would be a different story. I see that the nice little 3-BR cape, built in 1968, that I bought for $347,500 in 1997, and sold for $555,000 in 2003, just sold about a year ago for $845,000. OK, it did have an in-ground pool and the school system has an excellent reputation- but how does a young married couple afford that? One family I know had kept their "starter house" as a rental and when their older son married he and his wife moved in. I don't know what the financial arrangements are.

DS, at around the same age, bought a starter home in Des Moines with about a $15K down payment under a special program for first-time buyers, had friends living there as tenants and evicted them when he married. I gifted them a bit when they needed a bigger house, which cost $200K in 2019. I can't imagine what a similar house would have cost them in NNJ. Bonus: DDIL is a full-time mother, which is what they wanted. In NNJ they'd both be working to pay the mortgage and probably drafting the Grandmas for free child care.

In some areas with crazy HCOL you gotta help your kids even when they're responsible and have good jobs.

 

[Out-to-Lunch]

Well, your former home was much less affordable in 2003 than it is now. At least acording to CPI. $555k in 2003 is equivalent to just over a million ($1000k) today.

 

[Montecfo]

I can beat that. When my daughter graduated from Penn State ( 100% paid by me) she was struggling to pay her rent. I was partly to blame, insisting that she live in a safe downtown Philadelphia neighborhood. After a couple of years of this, I decided what the heck. (She's going to wind up with my money anyway.) I went out (unknown to her) and bought a lovely little downtown loft condo with big windows & deeded parking. (My name on the deed). My thinking -- she'll get married in a couple of years, no doubt, so I can make her single life safer & easier for her -- while it lasts.

Well, we gave her a big surprise party Christmas Eve in the unit and she got the key on a pretty red bow. She was 26 years old at the time. Happy day, yes?

(Me and my big plans....)

Fast forward: she's 41 now -- STILL single, STILL living in the same damn unit and (worse yet) Philly's real estate market is comatose. In 15 years the unit hasn't appreciated a bit. Zilch. Zero. Nada. Get the drift? And it's TOO nice. Even if she wanted to move, she couldn't afford the higher end freight. So I'm stuck.

Last year I got fed up and announced to my wife (not my daughter's mom) I was going to charge the kid rent. Well, we had SUCH a fight. Wife's position: you gave the unit to your daughter as long as she wanted to stay there. There was no exit date when you handed her the key. Fathers may lie, steal, cheat, embezzle, drink, snort or have girlfriends --- but dads MUST keep their word to their daughters! That's the eternal law. (It's written down someplace.)

Like I said: stuck.
.
.

but... forever? Really?

That's a tough one.

Hopefully she gets married soon (which is really the larger issue, or would be to me) and the situation resolves on its own.

 

[iloveyoga]

but... forever? Really?

That's a tough one.

Hopefully she gets married soon (which is really the larger issue, or would be to me) and the situation resolves on its own.

Why does she need to get married?

 

[athena53]

Why does she need to get married?

I agree- no need to get married. I'd hope she'd have a lot of savings from not paying rent all these years and could get her own place.

Well, your former home was much less affordable in 2003 than it is now. At least according to CPI. $555k in 2003 is equivalent to just over a million ($1000k) today.

Zillow lists its current value at $1.1 million but that's a major jump from last year's sale price so I don't know if I believe it. And property taxes are $12K/year.

 

[Montecfo]

Why does she need to get married?

That was the OPs plan.

 

[citrine]

Absolutely frigging not! My parents had wanted me to move back to NJ after the divorce...even offered to get me a new car and buy a home. They mean well, but are very dysfunctional...there is a reason I moved cross country to the desert to get away from all of that drama
I will stay in the home we bought while married....I have one acre and my ex is parked on the second acre. When we sell the home, I will find a nice place to rent/buy in ABQ.

 

[cedricwill943]

I can beat that. When my daughter graduated from Penn State ( 100% paid by me) she was struggling to pay her rent. I was partly to blame, insisting that she live in a safe downtown Philadelphia neighborhood. After a couple of years of this, I decided what the heck. (She's going to wind up with my money anyway.) I went out (unknown to her) and bought a lovely little downtown loft condo with big windows & deeded parking. (My name on the deed). My thinking -- she'll get married in a couple of years, no doubt, so I can make her single life safer & easier for her -- while it lasts.

Well, we gave her a big surprise party Christmas Eve in the unit and she got the key on a pretty red bow. She was 26 years old at the time. Happy day, yes?

(Me and my big plans....)

Fast forward: she's 41 now -- STILL single, STILL living in the same damn unit and (worse yet) Philly's real estate market is comatose. In 15 years the unit hasn't appreciated a bit. Even it needs mold inspection and iaq testing now. Zilch. Zero. Nada. Get the drift? And it's TOO nice. Even if she wanted to move, she couldn't afford the higher end freight. So I'm stuck.
Event it
Last year I got fed up and announced to my wife (not my daughter's mom) I was going to charge the kid rent. Well, we had SUCH a fight. Wife's position: you gave the unit to your daughter as long as she wanted to stay there. There was no exit date when you handed her the key. Fathers may lie, steal, cheat, embezzle, drink, snort or have girlfriends --- but dads MUST keep their word to their daughters! That's the eternal law. (It's written down someplace.)

Like I said: stuck.
.
.

That's actually a pretty generous problem to have. Your daughter got 15 years of stable housing in a great location, and it sounds like the condo did exactly what you intended it to do, make her life easier and safer when she was starting out.

The lack of appreciation is unfortunate, but if the alternative was 15 years of rent checks to a landlord, I'd still call it money well spent. Your wife's point about keeping your word probably carries some weight too!