Money Matters
julieanne912
member
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UPDATED Sort of MM related - parents moving in
Sorry, this is a bit long...
So, my folks are moving here next summer. My mom is retired, my stepdad works as a school bus driver (He's 12 years younger than her and will probably work for 8-10 more years), which there is a shortage of around here, so no worries of him finding a job that pays similarly to what he already makes. They will be selling their house in CA at a break even point, they purchased it at the peak of the last bubble. They have no debt at all besides the mortgage on the CA house, and while they don't make tons of money, they do OK, my mom brings in around 2k a month between social security and a couple of small pensions, and my stepdad is in the 40k a year range for his job, and he also does side gigs like Uber to make extra money. My mom also has a decent amount of money in various retirement accounts that she has access to, although the tax consequences varies for pulling from the different accounts.
We've been discussing the idea of them paying to finish our basement, and moving in with us. We want to have a kid in the next year or so, and my mom would provide free childcare, and they would basically be living rent free, although what they're paying to finish the basement could be considered up front rent. My mom said she has up to $50,000 available after Jan 1 to do this. We would also put a time limit on this, like 5 years, and then they'd need to find their own place There is no separate entrance to the basement, they would have to enter it through our house, and there's no way to add a separate entrance. We would split the house utilities. Our basement is 1,850 sq ft, so plenty of room for 2 bedrooms, a bathroom, a kitchen, a living room, and a den, and storage.
Their other option is to get their own place nearby. They've said they can afford up to $1400/mo for either renting an apartment, or purchasing a home (incl escrows/hoa fees). We're in a higher COL area, so they wouldn't be able to rent more than a 2 bedroom apartment in a decent complex, or they could take that $50,000 and buy a small condo or townhome. MAYBE a single family but it would be an older one that may require some upkeep and updating which is sort of what they want to get away from.
My mom and I have a good relationship, and my stepdad is a nice guy too. H is on board with this because he likes the idea of having our basement finished. I lived with them for a year and a half before I met my H, and everything went fine, but that was a different circumstance and there was no money involved there. The free childcare aspect is huge, as daycare alone would run $1200-1500/mo for an infant around here, not counting what a sitter would cost for date nights etc. But, I also don't want to damage or take advantage of our relationship, and I am the one who brought up them maybe just buying a place with her 50k as a downpayment, as that would benefit them financially more in the long run I think (and they'd get the interest deduction).
So just curious what the MM'ers think of all this?
So, my folks are moving here next summer. My mom is retired, my stepdad works as a school bus driver (He's 12 years younger than her and will probably work for 8-10 more years), which there is a shortage of around here, so no worries of him finding a job that pays similarly to what he already makes. They will be selling their house in CA at a break even point, they purchased it at the peak of the last bubble. They have no debt at all besides the mortgage on the CA house, and while they don't make tons of money, they do OK, my mom brings in around 2k a month between social security and a couple of small pensions, and my stepdad is in the 40k a year range for his job, and he also does side gigs like Uber to make extra money. My mom also has a decent amount of money in various retirement accounts that she has access to, although the tax consequences varies for pulling from the different accounts.
We've been discussing the idea of them paying to finish our basement, and moving in with us. We want to have a kid in the next year or so, and my mom would provide free childcare, and they would basically be living rent free, although what they're paying to finish the basement could be considered up front rent. My mom said she has up to $50,000 available after Jan 1 to do this. We would also put a time limit on this, like 5 years, and then they'd need to find their own place There is no separate entrance to the basement, they would have to enter it through our house, and there's no way to add a separate entrance. We would split the house utilities. Our basement is 1,850 sq ft, so plenty of room for 2 bedrooms, a bathroom, a kitchen, a living room, and a den, and storage.
Their other option is to get their own place nearby. They've said they can afford up to $1400/mo for either renting an apartment, or purchasing a home (incl escrows/hoa fees). We're in a higher COL area, so they wouldn't be able to rent more than a 2 bedroom apartment in a decent complex, or they could take that $50,000 and buy a small condo or townhome. MAYBE a single family but it would be an older one that may require some upkeep and updating which is sort of what they want to get away from.
My mom and I have a good relationship, and my stepdad is a nice guy too. H is on board with this because he likes the idea of having our basement finished. I lived with them for a year and a half before I met my H, and everything went fine, but that was a different circumstance and there was no money involved there. The free childcare aspect is huge, as daycare alone would run $1200-1500/mo for an infant around here, not counting what a sitter would cost for date nights etc. But, I also don't want to damage or take advantage of our relationship, and I am the one who brought up them maybe just buying a place with her 50k as a downpayment, as that would benefit them financially more in the long run I think (and they'd get the interest deduction).
So just curious what the MM'ers think of all this?
Re: UPDATED Sort of MM related - parents moving in
Also, I would think long range - if you sell your house how will the basement unit market? A traditional inlaw has its own entrance I think, and I can't imagine it being a rental unit if you can't have a separate entrance. So would the costs be recouped? Or would it be a detriment because people would feel like they had to get rid of the extra kitchen? I'm sure you thought of those things, working in the rental market.
If you go forward with this I would make sure there there were very clear boundaries and expectations.
Is this money to refinish the basement yours to do whatever you want with (styles, finishes, function, etc.)
What hours will your mom provide child care? What about date nights?
Have you thought about not putting a kitchen in the basement and having a shared kitchen with agreed upon cooking duties? That might help the basement worth more in the long run if there wasn't a full kitchen down there since it won't be a legal apartment. You could put a small fridge, sink and "wet bar" type set up down there which most buyers would like.
What happens if they move out before 5 years? What if you WANT them to move out before 5 years?
What if (and I hope this doesn't happen) you can't get pregnant? Will they be expected to pay rent?
What about guests? Do your parents have to "hide" in the basement if you have friends over? Do your parents need to have "permission" to have their friends come over? Do they have to stay in the basement?
Think carefully how your day to day life will work.
Our original plan, before any of this came up, was to have a really big bar with sink and refrigerator down there, so the kitchen would just be a replacement for that without it being too weird, only extra item would be the stove, and we'd probably make it a bit bigger.
What if they pay for it to be finished, move in and decide things do not work out (not get along, want their own place, etc), within a year or two?
- Will there be a discussion about paying them back? Will there be animosity about it? Will they want to stay regardless because they paid?
What happens if they want to decide how to finish the basement and you do not like it?Is it possible your mother's age/health could impact her ability to walk up and down stairs in the near future? (I don't know her age or health status).
What are the rules if they want to have friends over? Since they have to enter through your regular house, does that impact you?
I think one option could be that they pay for the equivalent of one year's rent to put toward finishing the basement and then you/your DH finance or pay for the rest. Then, they pay a monthly rent which would help pay off the basement. It would then create a potentially less stressful situation if things do not work out for more than a year.
She would provide childcare while I'm at work, so 8ish to 7ish? New job is 9-6. Date nights would have to be pre-arranged, just like with a sitter. No us deciding 20 minutes before that "hey, we're going out, watch the baby". Also after a year, I'd probably look at putting the kid in daycare 1 or 2 days a week for socialization purposes.
I don't think it would work unless it was a totally self contained apartment. It's interesting though, there's a custom house in our neighborhood that has 3 completely separate apartments in it, for each set of in laws. It's not considered a multi family home though. So I don't think having a full apartment set up down there would be a total detriment to buyers as long as we set it up the right way (ie not a lot of little rooms etc.)
If we can't get pregnant then we would lose out on the childcare benefit but nothing else would change.
We tend to entertain in the form of a party with EVERYONE there, so they'd be invited to that. Very rarely do we just have one or two friends over, but they wouldn't have to hide or anything (although my mom probably would, she's an introvert and her idea of a good time is to read or quilt LOL). They could have whoever they wanted over into their place too, and could use the outside if they wanted (just not our living room, for example). I'm not sure how often that would occur either as they don't have a lot of guests over in their current home.
The day to day aspect is my biggest hangup about all of it... it would definitely take some changes. I wish we had thought to put an exterior entrance to the basement on the house when we built it, now it's too late.
That's a tough one. There are certainly a lot of advantages on both sides. But also the potential for things to go wrong and it would be terrible if it caused a rift.
We actually had a similar situation in my family. It did not go well. My grandparents were retired. Long story short, it was decided they would invest in building a garage apartment at my aunt and uncle's. My aunt and mom are their two daughters. They dropped a good chunk of their retirement savings into this addition, but were planning to live there the rest of their lives.
Fast forward less than five years. My aunt's 20+ year marriage ended and they divorced. The house had to be sold. Except between the mortgage and the HELOC, there was pretty much nothing left to give back to my grandma (my grandfather passed away before it got to that point).
On the good side, there is a lot of love between my grandma, mom, and aunt. So it didn't cause a breakdown of those relationships and they are all still close. However, I can't help but think my grandma was resentful, though she never said anything to me. My mom was definitely resentful, but I doubt she ever said anything to her sister. Knowing my aunt, she probably feels guilt about it, but there wasn't much she could do. Her ex was the breadwinner and she was barely scraping by after the divorce.
I don't know how much, if anything, was worked out between the parties ahead of time.
My best advice. Contracts and understandings are always important but I think they are ESPECIALLY important when there are emotional ties. Proceed cautiously and think of every possible eventuality that could happen and include clauses for those.
For buying, she originally thought they couldn't buy a house that was more than $200,000. With her money though, they could afford more than that and still have a reasonable monthly payment, especially once you factor in the interest deduction. I emailed her some listings just to give her an idea of what, say, $250,000 (which would still have a 200k loan) could buy her, which some more (not a lot, but more) than $200k. So we'll see, thankfully, we have some time to decide.
Pro: You may have decided with H that when a parent(s) are elderly and unable to live by themselves they will move in. Living with them now for a few years may be a preview of how that situation could work out in the future. It could possibly be the solution of where they would stay in that scenario.
Con: you may not be allowed to have a basement apartment depending on zoning for your area/house. And basement apartments without exits are often considered to be against fire code.
Overall 5 years seems like a long time. If it were some kind of arrangement that was closer to 1 year so that your parents could get acclimated to the new area and take some time finding a place to live that might be more agreeable than taking a 5 year break from having their own place.
I sent her some listings and she found a few she liked already. Obviously those won't be available next summer but I think it helped her feel better about finding something decent that is better than renting an apartment. And, to be honest, it helped me feel better that they could still have a house or townhouse instead of a crappy apartment.
My mom also said they don't want to move twice, so she wasn't comfortable with the time limit we put on them staying with us.
When we buy our next house we are going to look for something that has a guest house or enough land to add one (lots of homes around here have separate guest houses for some reason). That way my remaining parent can move in close, but have their own totally separate space. They could build it or fix it up however they want (on their dime), we would have plenty of privacy, but I would be very close for social and medical reasons. Plus a guest house is pretty valuable for future buyers because of the rental potential.
We floated this idea to my parents, and they really liked it. We all agree that we could not live together in the same space, but being in separate buildings would be totally fine.
Reminds me of when we were house hunting I found this property wayyyy out east, like 30 minutes from the closest town, it was a nice house with separate guest house (perfect for my parents) on 35 acres, complete with animal pens. And, because it was so far east it was like 100k less than our house ended up being. I tried to get H to go for it, said we could have our own farm, or operate a livestock rescue or something. He was like, yeah, not happening. He reels me in LOL!