To think that buying PIL's a house would not be a good investment(120 Posts)
Before I start want to say I am genuinely canvassing opinion here - have framed as an AIBU but am open to people's thoughts.
PIL's have been considering moving house for some time to somewhere that would be more suited to their later years - they currently live in a fairly remote cottage which needs work.
A house has become available next door to BIL and an idea has been floated that this could be suitable for them. It is way out of the range of what PILs could afford themselves so would involve a 3-way split between PILs/BIL family/ourselves.
We have enough money saved that we could buy 1/3rd of the house from about half our savings. DH was able to save a good chunk of money in a period that he had a lucrative contract and we were living well within our means. Since then we have moved house, doubled our mortgage and I am about to go on maternity leave with our first child. DH is still paid well but finds his job very stressful.
Buying the house for PILs is being pitched as a "good investment". I am happy in principle to help PILs financially but AIBU to see this as potentially a very risky "investment"?
I wouldn't do it. You are about to have a baby and don't want your money tied up.
What would be the PIL's alternative options in terms not only of housing but also of later years care ? That's worth considering as part of the decision making process.
Risk, in financial terms, is the possibility that the value of the asset could go down as well as up. Whilst there may be ups and downs in property values over the years, the general trend is still up. So it's probably not risky from that angle. Co-ownership of property can have risks attached but, provided it is set up properly legally, those can be reduced. Very important to agree in advance what happens if one party to the arrangement needs to sell up, for example.
The risk that I would be considering more is whether you're happy tying up half your savings when you're just embarking on a period of life - parenthood - that is notoriously expensive. If you're reduced to one income for any period and if that income is at all precarious then the risks increase.
This could turn nasty very quickly if someone needed their money and wanted to sell. There must be other houses close to your BIL that cost less money that your PIL's could afford or where you all could invest a small sum rather than half your savings.
I think it would be a very bad idea to tie up your money in this way. If you need the money for any reason you won't be able to sell the house as then your PIL will be homeless. Also, I'm not sure where your BIL lives but if you aren't going to be receiving rent and are relying purely on house price rises, you won't necessarily get a good return on your investment anyway.
Personally I wouldn't. I would prefer to keep the money for a rainy day! You have just had a baby, you might want some unpaid leave, your husband finds his job stressful and may want to change paths in the future, you may need the money yourself.
I think when you said the house is more than PIL can afford that says it all, can they not keep looking until they find something suitable that they can afford?
No I wouldnt my dh and his brother bought a 3rd of their mums house well on yhe mortgage It didnt end well and since mil died the brothers dont speak it was horrendous, anyway id sell the cottage and the pils can save the money or buy the new house outright a cottage fixer upper will sell,
PIL have a complicated 'shared ownership' arrangement on their current property which means they don't have a huge amount of equity and limited savings. Their options without some financial help are a bit limited.
There would of course be big advantages to PILs living so close to BIL long-term (informal care arrangements etc) which is one thing, but DH/BIL are thinking of this as an arrangement which makes financial sense for them as well as sense for PILs.
If they cant afford it then they cant live there can they?
I will always help my parents when I can but tying up half of your savings when you are about to go ML and your husband is stressed at work is not a good thing. If anything, it will increase his stress because he knows that you dont have that cushion anymore that would offer him an opportunity to change careers if he chose.
Add into the mix they fact that money can turn perfectly nice people in absolute nightmares over night and I would say no no no.
What is your husbands opinion on this?
I wouldn't. DH was willed a chunk of FILs house.
When FIL died, MIL (divorced from FIL) moved in and changed all the locks. She also owns a chunk of the property, so is squatting in some of it.
We've taken legal advice, but have been warned that if things turn nasty, legal fees could swallow most of the money, so we have to just put up with the situation.
X Post, so your DH is on board?
Even so, I would still say no. Or if he insists say that fine, you will split the savings in half, you will put your half in your own account and he can do what he likes with his half. When he realises that he will have absolutely no savings at all if he goes into this then he may rethink!
What happens with maintenance? Inheritance tax even if one needs to go in a home. Three ways is too messy. How you can be the one to stop it without being a baddy, I don't know
I really can't see how it would be a good investment. If you wanted to invest in property, you'd be better off getting a buy to let, not funding a property that you'd be likely to inherit anyway. I appreciate that without the investment from you and BIL this property might not be there for you to inherit though.
There's just so much that could go wrong. What if you needed the money for something else and your PIL and BIL couldn't afford to buy you out? What if your PIL or BIL wanted to move from there for some reason? What if your PIL become unable to maintain the property to a high enough standard that it retains it's full potential value?
I wouldn't as parenthood is expensive, something that creeps up IME, and things can come out of the blue - job losses and such.
Plus people get nasty with property and money. If something happens and you need the money fast - what would happen would the others buy your share - would you force a sale ?
Are you going to be liable foe upkeep costs -as your family expands are you going to want a bigger house and need this money? What other options do they have regarding moving - not as close to BIL ?
At the moment this is an idea that has just been loosely floated but with the house next door currently on the market and liable to sell quickly I'm worried it could easily cascade into a kneejerk decision being made.
I always consider the savings as DH's 'get out of jail' fund - when he is very stressed I always remind him that he could give it all up tomorrow, take a pay cut, re-train, start his own business. He has options.
If we tied up the money in a house, he loses all those options. He is already stressed and outside of work our lives are pretty 'carefree' at present, something which will no doubt change when we add a child in the mix!
This only has the potential to be very messy. What if bil decides that, being next door and (presumably) providing the bulk of the care, that he should have a bigger share of any future profit? What if one of the needs residential care regardless? Too much can go wrong here. It's a shame for them, but most people nowadays are in this exact position of not being able to afford their dream home! If they are looking to downsize then I'm sure something suitable and affordable will come along.
I wouldn't. Keep your money for your new family.
They cannot afford a one or 2 bedroom semi?
they need to live within their means or BIL and PIL should do it between you.
"Thank you for this kind opportunity to invest but we cant afford it with only one wage and a baby on the way"
I'd be asking questions about the potential pit falls - what would you or BIL do if you needed the cash - buy out force a sale ? What will happen with property maintenance as your IL age - point out your asking both as you don't want the family falling out and not talking.
Just getting them both to think about the downside as well as the benefits has to be a good idea to help stop any rash rushed decisions.
I would be paying down my own mortgage first.
I wouldn't either. There are too many possibilities of things souring and people falling out. It's a complication you don't need when you are just starting a family of your own.
I wouldn't, then. It has the potential to be really messy (even with good legal agreements and a good return on capital - which is by no means certain) and also divisive and stressful within the family. It's my general principle to try not to mix business and family relationships because both can be soured irrevocably.
Maybe have a think about alternative living arrangements for the PILs? That will clearly become an issue within a reasonably short time.
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