To think that buying PIL's a house would not be a good investment

[Plateofcrumbs]

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 because

• your DH may not have the opportunity to save that kind of money again!

• you have a baby on the way - and may choose not to go back to

work/go back on reduced hours/need money for childcare.

• what if your PIL/one of them needs to go into a home and they need to sell/borrow against the equity of the house to pay for care. It would be churlish at that point to say 'but a 3rd of that money is ours'.

• What if PIL fall out with BIL/SIL as neighbours?

• What if you disagree with how BIL/SIL are treating PIL (when they're older and need more care?) or if BIL/SIL decide more of the house share should be theirs when it comes to sell because they provided more hands on care?

• I'd resent it if PIL treated themselves - as they'd be doing it at the expense of your family (literally).

• Even if everything goes swimmingly, if PIL don't maintain the property then you may lose money when you sell anyway.

Having savings buys you options...

I do feel a bit guilty for being down on the idea as we are financially more comfortable than BIL and certainly much more so than PILs. Even half our savings would still leave us with a substantial financial buffer. However I'm well aware that the circumstances which allowed DH to save up so much will be unlikely to ever arise again and we will only be able to save at a much more modest rate if at all, certainly in the short term.

I wouldn't do it either - we've had a relatively simple arrangement with my father and sister. It all starts out fine, then a couple of years later it all turns a bit messy. You'd think that 5 rational well-educated adults (including DHs) would be able to sort things out without acrimony, but it seems not. Five people can have five very different views on money, upkeep of property, what constitutes a good investment/addition to the property and when to sell.

Also, it isn't a good investment if you aren't receiving rent. Don't forget capital gains tax may well apply if and when you sell as it isn't your main residence.

Think 5 years ahead - you may have more children, you may want to stop working for a while, your DH may want to set up his own business. All of your plans are made more difficult if you can't access your nest egg.

Sounds like a bad idea to me too. If they can't afford a house, then they should just live in a flat like other people have to do.

It's not even as though they need the extra space is it?

It isn't a good investment, but it might be a nice thing to do
BUT there are tax implications, and you'd have to consider those and do some estate planning with a professional, so you don't end up paying inheritance tax on your savings, effectively.

Are bil/sil going to provide personal care when your pil may need it?

If not, there's no need for them to be right next door. A few streets away or the other side of town would also be ok.

Serious question. Why are you paying out so much on your morgage when you have so many savings. They can't be getting anywhere near as much interest as you are paying out on your mortgage.
I know you want some for a rainy day but seriously, enough to buy 2/3 of a house?

I agree with PP's that have said that it could become problematic if you or BIL need access to the cash.

I would also want to know from BIL what would happen when PIL pass away - or if they need to go into long term residential care - would BIL want to buy your share or would he agree to sell and split?

Also consider CGT that you may have to pay if the property goes up in value - or the money that you may lose if it decreases in value.

I would also put to BIL that would they one day want to move? What happens then when PIL are stuck on their own?

If you do buy it all together, you must buy it as tenants in common so that you only own your share of the property - if one of you dies, your share then gets divided according to your Will, not just passed to the other owners. You could have in your Will for PIL to have quiet enjoyment of the property to the end of their days or until they decide to move. There's some very serious stuff you need to consider, and you all need to agree.

Hope that helps some.

I think my view is that if PILs are really in a financial fix that means they can't afford to move out of their cottage, I would rather 'gift' them a more modest sum that would give them some realistic options rather than tie up the kind of money that we couldn't just write-off.

What happens if you don't though? This is something that needs to be discussed. What are their other options?
Its not all about money. How will your DH and his brother feel if they stay in this remote unsuitable cottage and have health or mobility problems, and their quality of life deteriorates significantly? How will it impact on your families when it comes to care and assistance for them?

I'm not saying you should do it. I'm just saying that it might be worth it for all of you, not as an investment in property, but as an investment in a happy wider family (and for your nuclear family too)in the longer term, which generally, money can't buy. In this case maybe it can.
If your pils, bil, and your DH all want this, and you are the only one against, you also have to factor in that they may all resent you for preventing it if and when things go pear shaped in the future.

Perhaps its a terrible idea. But I'm surprised that almost all of the focus here seems to be on the money, when its about much more than that.

From BIL view point - is he going to want to be living in his current house forever or till IL pass? What happens if he wants to move - will he feel constrained and resentful because he feels he can't or would he just move negating a big reason for the whole arrangement?

The informal care thing could also get old very rapidly for him - I know my parents needed time out from my GP demands when they got very old - it was that of go under with their own health.

I'm not sure it being down on the idea more being the sane practical one while everyone else has is caught up in the excitement of the idea.

I wonder what your BIL's wife or partner thinks about having the in-laws living next door

How much are we talking? It does make a difference - if you'd still have, say, £100k in savings even afterwards, I might give a different answer to if you'd only have £10k left.

But surely you don't have that much in savings and a mortgage - that would be madness! (And would also suggest that your DH isn't as financially astute as he thinks he is.)

Can they afford a property at all or will you & bil have to help wherever they want to live?

^Serious question. Why are you paying out so much on your morgage when you have so many savings. They can't be getting anywhere near as much interest as you are paying out on your mortgage.
I know you want some for a rainy day but seriously, enough to buy 2/3 of a house?^

Well it'd buy 2/3rds of a house where BIL lives, not so much where we live!

But yes we could well pay down a substantial chunk of mortgage with the savings. However as my dad always says 'you can't buy anything with bricks' so I feel much more secure having a good amount of savings in cash. As interest rates go up and our income/outgoings change we might well choose to pay down some of the mortgage to reduce our repayments.

First of all, I wouldn't do it while I was still paying a mortgage. This makes no sense to me, having large amounts of savings and a big mortgage.

Secondly, your PIL need to rent. They don't have to own property.

You might be in a secure position financially, but you're about to start a family, and there's a reason why you need to be in a good position financially.

Children cost money, and if you are able to then surely you want to put away as much money as possible to provide for their future. The way things are going, they are going to need help to go to uni, to buy a house, to learn to drive, having children is no longer a financial commitment for 18 years, it can go on much longer.

If you have money available now, pay down your mortgage so that when the time comes where you have children in childcare, wanting to go on residential school trips, do a few extra curricular clubs each, you want to go on nice family holidays abroad, you have the money available to do that, and at the same time you have certainty that the money in your mortgage really is being invested wisely.

How many children are you hoping to have? What if one of them has extra care needs?

If this were a decent investment you'd be able to see where the return on your money will come from, but in a shared ownership scheme with family, you just don't have that.

If you do this, it is IMPERATIVE that they make a will specifying what will happen to this property and that you are all happy with it. You should get proper legal advice on this.

In your situation I wouldn't do this. It sounds like you have too many (both current and future) financial pressures of your own without taking on an additional one, and tying up money that at best would make your lives easier and more pleasant and at worst you may really need.

Hard position to be in.

Family and money. No. Just no. Do not do it.

I think you also need to consider the relative ages of the people involved. You say "for their later years" which makes me think the PILs are fairly young - say 60ish? The purchase may well end up being a good investment but you may only be able to realise the returns 30+ years from now so in YOUR later years.

We've considered doing similar - PILs will need to leave accomodation linked with job soon. Houses in their area are fairly affordable but they will be on small pensions so wouldn't be able to buy and will rent for the rest of their lives. We looked at if we could afford to buy and rent to then for a reduced rate, but even taking into account the relative cheapness and the fact they'd be paying some rent it's be a stretch too far for us (if you consider maintenance etc) and would take our family to the very limits of stability.

If you are cautious to the extent that you won't even put it towards paying your own mortgage off, in case you need it, then you absolutely should not do this.

Also as every said, it could be tied up for 30+ years. You won't be able to access it for university fees etc and you won't even be able to pay the mortgage off either to increase your monthly income.

I'd pay your own mortgage off first then if you want to, you could use some of that extra monthly income to help them out on a monthly basis.

What makes most financial sense partly depends what alternatives there are, and OP isn't really talking about those except as a safety net.

imho,

1. OP & her DH should get an offset mortgage (do they not still exist)? so that all their money works for them, this applies regardless of what else they do;

2. OP should fund up to 1/3 of the inlaws purchase. This isn't about a good investment, it's about helping relatives, and the money will still be relatively secure.

I've seen this sort of thing before (although not exactly) and while I don't know what your BIL is like, I can just imagine a few years down the line.

Maintenance of an owned property can be quite substantial (ie it won't just be a one-off capital outlay) and even with tight legal agreements you'll be billed for one third of it anyway and - likely if your parents and BIL are strapped for cash and you seem to be the wealthier ones - at least one half. ('After all, Bro, they're leaving their share to us anyway so we really own half each, eh?). Then, if the PILs and BIL are strapped for cash, there's the subvention for any rates, energy and other running costs plus the 'contribution' to acknowledge BIL's likely care for them. (Which will be a whole can of worms on its own.)

I'm not saying all of this would be unfair - just that it's unpredictable and divisive at a time when that's the last thing you need.

By the way - I'd stomp on this really fast. These ideas have a habit of galloping away with themselves especially when they seem, at first glance, to be emotionally satisfying and easy and when everyone concerned is in the first flush of enthusiasm and promising the earth.

Be prepared to be called the bad guy here.

I wouldn't. Or at least I wouldn't without legal and financial advice and probably not even then.