Would we be mad to buy a big house with my parents to live in?

[Sparkletastic]

We've half-heartedly batted the idea round for a few years about being a big gaff with my parents and living in it all together. Starting to think it is now or never and DH is much keener on the plan than I thought he'd be. DPs are in their mid-70s in good health and have a large house to sell, but not large enough for us all to live in (me, DH and 2 DDs - a teen and a pre-teen). We've done our house up and added value but I don't love the location. Together we could buy a big place and either divide it in two or do some work on it to make it suit us all. Has anyone done this? Very interested to hear thoughts on pros and cons. I should add we all get on extremely well and live very near to each other already so not freaked about being under same roof.

I think it could work well if it is a main house plus annex type thing, or converted stables. So everyone has their own s[pace but are all on the same 'campus'. Would be best if the DPs was on 1 level.

Lots of really helpful points here thanks all. I should say my parents are seriously minted. Me supporting them in old age wouldn't be of the bum wiping variety but more of co-ordinating care, providing company, taking on POA if needs be etc.
We had thought about a plot and doing 2 separate self builds (we both saw a Grand Designs or somesuch about Huf Haus years ago and were smitten) but land v expensive round here in the SE.
Seems DM is getting cold feet anyway. Compares herself favourably to her old friends and can't bear to leave her garden. Trouble is DH and I want to make a move soonish due to where DDs are at in the education. Think DPs want us to leave the deal on the table and let it mellow for a few years. I'm more now or never. Moving is such an upheaval so we all need to have the stamina for it.

We nearly did it. The plan was to buy a big house to put in an annexe for MIL. We bought the place, she sold hers and moved in whilst a refurb was going on. Unfortunately, it became pretty clear that it wouldn't work... Despite planning on having separate kitchens, entrances etc it was difficult to agree who should pay how much for the refurb. Also, I wasn't happy about us paying all the mortgage if we were giving up a quarter of the property. On the other hand, she didn't want to contribute as she wanted to keep the money in case she wasn't happy and wanted to move out a year later or need to pay home fees when older etc. Not to mention practicalities such as parking, noise (especially if downsizing from a big house). Also older people tend to have accumulated a lot of stuff that won't fit in an annexe or their bedroom. For example, would you be happy to use their furniture or have their decorations around? Do think it through...

Interesting Jojo - what a nightmare for you!
We are looking at pretty massive places that would divide in 2. DPs would put in all the capital and we would have a modest mortgage still. But all deals are off if DM has cold feet. DDad usually steam rollers her but don't think he will on this decision.