Buying a house so a relative can live with you - how would you work out the finances?

[taubel]

If we were to buy a larger house so an elderly relative could live with us, how would that work? 

First, we'd have to buy a larger house than we would if it were just us. For example, we'd need to have a bedroom and full bath on the main floor. 

The relative would be willing to contribute to the cost. For them, it would be cheaper than their rent, and they'd have companionship and help from family. For us, it would enable us to buy a better house than what we currently have (and save us from having to travel to and from the relative's current residence to help them with everything).

Would it be better to charge the relative a monthly "rent" or have them contribute a chunk when we purchased the house? 

It would be great to have help with buying a nice house, but what if the relative passed away suddenly and we no longer could count on their monthly portion of the mortgage? 

Has anyone ever been in this situation before? 

[insidevoice]

This is what we plan to do in a couple years.  However, we won't get into anything we can't afford completely on our own.  It is very nice to want to have a space for (in our case) aging relatives who want to be able to be closer as necessary, but we need to be able to foot the bill alone in terms of the mortgage. 

[thriftyqueen]

You really need to be able to afford the house on your own and look at the rent from the relative as added money to put toward the mortgage.  If you can't afford the house on your own, you are going to be in a hurt bag if the relative passes away or needs extra care that you can't provide and needs to be in a nursing home.  Are there houses in your area that you can afford with the set up you need for the relative?

[cristeen]

Can the relative contribute a chunkmupmfront for down payment? Dont get into a mortgage you cant afford by yourselves, but a larger down can mean you can afford more house. I would expect to be charging rent - enough to offset the extra utilities, time spent and food expenses. But since you cant predict the future, dont include that money in your mtg calculations. Unless the relative wants to buy the house with you (and you need to hold title with right of survivorship so its not included in the estate). Then you would need to work out the financial details between yourselves and the relative.

[taubel]

We can't afford a home large enough for a relative to live with us on our own. So I guess the only way to do this would be for the relative to contribute a chunk to the downpayment. I don't think they have much, though.

This isn't a situation we particularly want to get into. We just thought it might be easier in the long run.

I was just wondering if anyone else was in this position and able to work out a workable solution.

[StephandOwen]

I agree with the others- I would never get into a situation where I couldn't afford the house on our own. That's just asking for trouble if/when something happens to the relative.

[lilyka]

I ink the best plan wold be to have them contribute what they can towards the down payment (money now will reduce your mortgage considerably.) and then ask for a small monthly stipend to cover  food etc.  

[cristina47454]

Well, I have a "been there done that" type of story, although the details are different.  DH and I were moving bcs of dh's work and his parents were planning on moving in with this. They were late sixties at the time and were leaving the community they had lived in all their lives bcs...I'm still not really sure why.  Stairs were getting more difficult, none of their kids lived locally anymore, dh's dad was going to help dh with his real estate project, they wanted to get to know their grandkids...

So when dh and I started looking to buy a house we were suddenly looking specifically for a house that would accommodate them...inlaw suite on the first floor + enough space for us.  The pickings were pretty slim and we were running out of time, so we ended up renting a house.  The house was SUPER expensive. The inlaws were supposed to contribute $500/month.  They never did.  They were traveling to see their other kids and I'm not sure they ever spent a "full" month with us, so I guess they didn't think they needed to contribute.

Halfway through the year, they decided to move to live with their other daughter and build a house, so we were left with a huge house that was costing us an arm and a leg.  And meantime their daughter ended moving out of state, so they are still living in their daughter's old town, which is a 6 hr drive from us.

The original plan sounded nice, but totally ended up a disaster. The circumstances were different in that it sounds like your relative is ailing (?).  Our relatives were supposed to live with us to help with the kids and get to know the kids...yeah, didn't really work out that way.  If anything it was a disater bcs MIL was so worried about stepping in my toes that I ended up running the household largely my myself.  I was SO glad when that lease ended and dh and I were able to move to a house without thinking of meeting OTHER people's needs!

Oh and to make it all the more ironic, they ended up in a place with steep stairs.  What I learned from all of this? Never make plans based on somebody else's plans!

Edited by cristina47454 - 5/12/11 at 3:19pm

[ArtsyMomma]

We are closing in 10 days on a house we purchased with MIL in mind. We expect that in the next few years she will come to live with us. There isn't enough room for MIL in the house, so we purchased additional land with the idea that we could build a small 2 bedroom, 1 bathroom ranch style 'guest' house for her to live in. Close, but not in the same house! Our plan, is that we will pay for the guest house on our own - although I hope that MIL would be willing to pay for the construction. She is incredibly wealthy - building a guest house on our property would be maybe 1.5% of her net worth, probably less. DP would prefer to not ask his mother for $$, because he stands to inherit half when she passes away. I think it would be reasonable for her to pay for the house that we would have built for her. BUT it's likely she would never agree to pay for the house and would continue to live where she does (a 5th floor walk up in NYC - which she pays less than $115 a month for) until she was no longer able to care for herself. She is incredibly frugal.

[ArtsyMomma]

Oh - also this plan works for us because if MIL did not come live with us, even AFTER we built the house, DP would use it as a home office or we would rent it out.

[34me]

15 years ago my sister built a house a mile away from our parents who were only in their 50's at the time.  She picked the particular model she did because one or both of my parents could live with them if it was ever needed.  There is a medium size bedroom and full bath down stairs and 4 more bedrooms and 2 full baths upstairs.  They didn't even know that's why she chose that model until I told them, like 2 years ago. 

[EFmom]

I would prefer that they added to the down payment to cover the difference in purchase price between a house we'd get for ourselves and the larger house with an inlaw area.

A very good friend of mine expanded her home to add an inlaw apartment for her mother.  The mother was supposed to move in (three hours away from where she had been) and pay monthly rent.  The mother moved in and hated living with her, and moved out within 6 six months.  The whole thing was a disaster, as the mother was in the early stages of dementia, and was really in no condition to live on her own.  My friend is stuck with a house that is too big and expensive for her, but she doesn't want to move, as she loves the home and the neighborhood.  Plus, inlaw apartments generally are not home improvements that recoup their cost.