Home'scool Posted September 2, 2015 Share Posted September 2, 2015 So, hypothetically ...... I may be looking at being out on my own and have been trying to crunch numbers to see if I should buy or rent or what. My kids are 18 and 21 but I still want them to be able to have a place to come live during summers off from college and perhaps even after graduating. My sister is divorced. She lives in a Cape style house (3 bedrooms/2 full baths) that has an in-law addition with a full kitchen, full bath, two bedrooms, walk up attic and full basement.. She has a little less than $100k left on her mortgage. The house is probably worth about 250 - 300k. So I am thinking I would either pay off her mortgage (depending on my share from the sale of my house) or assume the balance of her mortgage. Then both our names would go on the house deed so I would own half the house. I would move in to the in-law apartment and she would continue to live with her two sons on the house side. Her sons are both grown so in about 5 years I am thinking all our kids will be out on their own. Then I could move in to the house side with her and we could rent out the in-law side or I would stay on that side or some combination, but we would live together. She would pay her expenses, I would pay mine, and we would split the utilities etc. in half. If sometime down the road we wanted to move we would sell and move together and use the proceeds for the next house. My sister and I get along very, very well. We are extremely compatible. Our kids are like siblings. We both have similar lifestyles and goals. Am I missing anything? Right now to rent a decent two bedroom around here is close to $2000 per month. I hate to throw that away on rent. Quote Link to comment Share on other sites More sharing options...
Anne in CA Posted September 2, 2015 Share Posted September 2, 2015 Assuming that all goes well with your sister and SHE wants to do it it sounds too good to be true. I know someone that sold their house, their parents sold their house and they used the equity to buy a house together that has no mortgage and they have lived very happily together for a long time. I would totally do something like that EXCEPT I cannot stand staying with my parents for too long, and my IL's drive me cray cray too. But, you both have kids and you would need legal papers spelling out ownership and what to do in the event either of you wants out or dies. Either of you could meet a man and want to move in with him and want your equity back for any number of things, either of you could have medical problems and need some of the equity to pay for treatment... that sort of thing. You should have fair options spelled out completely legally so that no one gets hurt/ hosed. Also, if one of you were to pass away and one of your children decides to be difficult the living sibling could have a very hard time. You might think, all our kids are great, none of them would do that... but if ONE of those kids marries someone difficult, you could have big issues. 7 Quote Link to comment Share on other sites More sharing options...
PeachyDoodle Posted September 2, 2015 Share Posted September 2, 2015 I think this sounds like a plan with a lot of potential. How long do you expect the arrangement would last? What if one of you needs to sell (if you were to need to move into a residential facility, say) and the other doesn't want to? What would you do then? 1 Quote Link to comment Share on other sites More sharing options...
Home'scool Posted September 2, 2015 Author Share Posted September 2, 2015 I am thinking it would be like a marriage, only with my sister. Our 401K's and savings would be individual and would be allotted to our needs as we get older or to our individual kids, but the equity in the house would be split like a marriage. For example, if she meets a guy and decides she wants to move out then, like a marriage, the house would have to be sold and split or she would have to buy out my share. Quote Link to comment Share on other sites More sharing options...
73349 Posted September 2, 2015 Share Posted September 2, 2015 Don't forget about taxes, insurance, and maintenance. Make sure to spell out what happens if one of you dies, marries and stays vs. marrying and leaving, moves into a nursing home, etc. I think it could work out very well. Quote Link to comment Share on other sites More sharing options...
arnold Posted September 2, 2015 Share Posted September 2, 2015 Personally I would not do it, too many things could go wrong. What if one of you marries; what if one of you wants to sell and the other doesn't; what if you decide you don't like living together; what if she/you die and the kids want their share of the money; what if the kid/kids want or need to move back home? I'd go on my own, rent a place for a while and spend sometime getting my thoughts/finances together before jumping into anything long term. 4 Quote Link to comment Share on other sites More sharing options...
Anne Posted September 2, 2015 Share Posted September 2, 2015 Given your description, I think it sounds like a fabulous idea! I would be sure that everything is laid out in writing, including all the "what-ifs" so that everybody understands clearly. Also, just the process of writing it all out will ensure that you and your sister really are on the same page. Anne Quote Link to comment Share on other sites More sharing options...
Pawz4me Posted September 2, 2015 Share Posted September 2, 2015 I think it sounds like it could work out very well for everybody involved. But like others have said, I'd want to get everything spelled out in writing, down to the smallest detail. That will protect everybody and can go a long, long way in helping prevent any misunderstandings and hurt feelings down the road. I think it's likely that situations like that are going to become much more common. Quote Link to comment Share on other sites More sharing options...
Minerva Posted September 2, 2015 Share Posted September 2, 2015 I think this sounds like a fantastic idea. I would, however, make sure you and your sister think of every little thing that you possibly can that can go wrong, even if it is unpleasant and unlikely, and then write a really strong contract. This way your expectations are clearly laid out, you have discussed everything up front, and you have agreed on how to deal with it. I have a lawyer friend who once told me, "The closer the friend, the tighter the contract." I think that is doubly true with family. Quote Link to comment Share on other sites More sharing options...
Truscifi Posted September 2, 2015 Share Posted September 2, 2015 As long as you are both fully on board and work out the details in advance I think it sounds like a great plan. Quote Link to comment Share on other sites More sharing options...
lllll Posted September 2, 2015 Share Posted September 2, 2015 nm 1 Quote Link to comment Share on other sites More sharing options...
IndigoGlitter Posted September 2, 2015 Share Posted September 2, 2015 I am with the others. It sounds absolutely great! I would work all the kinks down on paper. That way you blame the paper and not each other in the case of a mishap. Also have a timeline to revisit it. Say every 6 months or year or whatever. I would jump on it in a heartbeat if I was in that situation. Sounds like a win-win to me! Oh, one thing more... have a strong agreement to keep the lines of communication open without repercussion, have the mind set from the get go. Miscommunication is probably the number one reason things go sour. Just my thoughts! Quote Link to comment Share on other sites More sharing options...
LucyStoner Posted September 2, 2015 Share Posted September 2, 2015 I'm going to throw out concerns that I think you need to resolve before proceeding. I'm kinda missing why should should give you 1/2 of a stake in the house for what could be less than 1/2 of the present value of the house. If I were her, I would be hesitant. Also, if either of you decide to remarry, you guys need to sell or, of course, launch a sitcom or reality show. Also, inheritance. One of you dies. The surviving sister needs to buy out her neices/nephews? Or do the children of the deceased just not get that part of their inheritance until their aunt dies? I'm not opposed to living with siblings, but I think the financial side of this could be tricky. Honestly, I would test it out by renting the MIL for awhile. I think that if you want 1/2 of the house ownership wise, you need to pay her 1/2 of what she could sell for now (get an appraisal from a few people), and not just the remaining mortgage balance. Later on a new spouse or a child might make an issue of it if they think someone was shorted. Quote Link to comment Share on other sites More sharing options...
SweetandSimple Posted September 2, 2015 Share Posted September 2, 2015 What about renting the mother-in-law unit from her for six months or so, and then you could see how much you like living there? Then you could commit to the bigger plan if all is going well. 4 Quote Link to comment Share on other sites More sharing options...
Acadie Posted September 2, 2015 Share Posted September 2, 2015 Agreed that consulting a lawyer will help you work out the important details around various contingencies in writing, and I wanted to add that all of your children should be part of the discussion, in age appropriate ways. They should know the arrangement from the get go and should explain it to potential life partners. That wouldn't preclude problems later on, but could really help. I think with the legal and communication stuff done right, this could be really wonderful, and I'd absolutely enter an arrangement like this with my own sister if we worked through those issues to our mutual satisfaction, with a lawyer. The lawyer would help you figure out what's a fair way to split the value of the house--I think Lucy's onto something about making sure it's equally beneficial for your sister and for you. If she realizes later on that the way the value was split wasn't in her interest, that could sour the arrangement. Amy Quote Link to comment Share on other sites More sharing options...
WinsomeCreek Posted September 2, 2015 Share Posted September 2, 2015 Would you consider renting from her for 6 months-a year first? It wouldn't be throwing away rent because you would go to your sister. I would do that first to make sure it works for everyone long term. Quote Link to comment Share on other sites More sharing options...
plansrme Posted September 2, 2015 Share Posted September 2, 2015 You might want to look into life insurance with the other as beneficiary of enough to buy out the first-to-die's interest if you want the survivor to be able to stay in the house. There should be first-to-die insurance available somewhere, and you could split the premiums. Also, I'm not sure your numbers work out--you are contributing a present value of, let's say, $70K (because the present value of $100K over the next 10 years or whatever is left on the mortgage is not worth $100K now) for a 50% share in a house worth $300K. But I assume those were just examples, and you can come up with a number that works for both of you. There were a bunch of articles on house-sharing in California and other high-COL areas a few years ago; perhaps some of those would have some more ideas. Quote Link to comment Share on other sites More sharing options...
Home'scool Posted September 4, 2015 Author Share Posted September 4, 2015 Thank you for all the input. I like the idea of sitting down with all the kids and going over it all so that everyone is on the same page. I also think it's a good idea to have a lawyer go over everything. It helps to know I have options when looking change up my living situation. Quote Link to comment Share on other sites More sharing options...
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