Investing in property with your kids

6 Replies

I need advice, suggestions, anything.  About 3 months ago, we decided to invest in a house (with rental accessory apartment) in an area where 3 of our kids go to college.  Our oldest and her husband were wanting to invest in a place with us and be 50/50 partners.  The understanding was that we were going to put 20% down and they were going to live on the main floor of the house ($1150) and we were going to rent out the bottom ($950).  Mortgage is $1450 and we wanted to pull in $2100 to cover expenses, etc.  We are scheduled to close at the end of the month and now we find out that we are not in agreement as to how this will work financially.  We thought that our kids would not be full partners until they put down 30k (half of down) and they thought that they could just live there and whatever they paid in rent, would be fully applied to their portion of the down payment.  I guess i'm fine with applying part of their rent towards equity but not the full rent.  What is fair?  Help!  And lesson learned would be to NOT invest with family?  Thanks in advance!

This may cause some family feuds. I personally would never do it. It would be easier if the mortgage was under whoever put the down payment but I am assuming the mortgage is only under your name. I dunno how tight you are with your family but I would at least put something on paper. Kids usually take advantage of their parents in this situation and make excuses how they need $$ for school, books, booze and parties..

Tough situation. It seems like it's best to just not do it at this point. I think you all should've had this figured out more than 20 days before closing. It almost appears as though they (daughter and her husband) were trying to take advantage of the situation. I could be making a wrong assumption though, since I don't know either of them personally. I've just seen people do crazy things over money. How much of the $30,000 can they put down now? If they can put down $10,000, allow them to be 1/3 partner and you and your husband are 2/3. As they pay more of the downpayment, it can increase their "share" of the house. You just have to agree on how much of their rent should be applied towards the down payment. How much will the house cash flow right now? 

@Chris Szepessy - Mortgage is $1450 and we can rent the entire house out for $2100.  If our daughter pays $1150, what would you suggest would be fair to be applied towards equity.  This is our first rental property so we have no experience in this at all. I feel that our kids are trying to take advantage of us and the situation.  Definitely, the first and last time we will do this with family.  Thanks!

Are you taking into consideration the cost of other things-maintenance, repairs, vacancy, property management (although you’d probably self manage for now) etc.? If not, you’d be left with $650 to cover those items. You’re going to be pretty close to breaking even at that point and there really won’t be any money left to use towards their down payment. If you feel like you’re being taken advantage of, I would suggest buying the house without your kids involved and if they choose not to live there because of it, then so be it. There’s plenty of other good tenants out there that will rent the place. I’m all for helping family out, but when people start taking advantage of someone, that’s when it’s gotta stop.