Should You Buy a House With Your Kids?

August 27, 2019 | Posted by: Ron Chan

Should You Buy a House With Your Kids

Last week we released an article titled, Should You Buy a House With Your Parents, detailing the five key qualifiers surrounding whether or not it’s a good idea. This week, we’re flipping the script for the sake of parents with adult children who are asking you to buy a home with them. Is it a good idea? Let’s find out when it is.

4 Reasons Why Getting a New Mortgage With Your Adult Children May be a Good Idea

1. Empty Nest Opportunity and Investment

When your child grew up and left home (we’re making an assumption here) they left you with an empty nest. Unless you have grand plans for turning their old room into a fitness or entertainment center your house may simply be too big for your current lifestyle. This gives you the opportunity to sell your current home, buy into a smaller home/condo, and use the excess funds for a pure real estate investment - always the smartest form of investment in Winnipeg (where the market is prime). By sharing the mortgage on this residential venture, you greatly reduce the capital needed for the downpayment and monthly mortgage payments. In this scenario, you own your own, smaller and more efficient home/condo, and also have a another residential property in your portfolio. Even though it’s shared, you have now increased your wealth as you approach your retirement years.

2. Can Help Make Your Vacation Home Dream Become a Reality

While you’ve typically been the one to provide a helping hand when it comes to finances, your own kids can start returning decades of “hand outs” by partnering with you in a real estate venture, one that allows you to have the retirement vacation home you’ve always dreamed of. The process is simple. When your kids approach you again about the prospect, let them know that you'd be happy to share the downpayment and mortgage payments, with one small caveat - the home will be used as a vacation home for you, and the family (as you see fit). When not in use, the property can be placed on the short term rental (STR) market to generate revenue from Airbnb and VRBO, which works in both your favors. It’s a win-win all around.

3. They’ve Got Kids (You’ve Got Grandchildren)

This is one scenario where you are allowed to let your heart guide the way. It’s one thing to help your child make smart financial decisions, but when you consider that the home you’re sharing investment in will be handed down to your precious grandkids you have all of the incentive you need. Imagine gifting them with significant equity so early in life? You’ll give them then head start that you an maybe your own kids didn’t have. 

4. The Market is Prime

The Winnipeg market is prime for low risk real estate investment. Coming off the summer of 2019 buyers are finding near record low fixed mortgage rates and even very low variable rates, creating a perfect storm for buyers of all types. This is due in part to the Bank of Canada holding the prime rate steady all year long, and a drop in the bond yield. While these trends are expected to last through 2019, they won’t maintain forever, so the time to act is now. 

If you have any further questions about entering into a shared mortgage with your children, contact Winnipeg mortgage specialist Ron Chan today at 204-290-9950.

 

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