Buying a House to Rent to you Parents

[John J.]

I haven't dove head first into throwing money at real estate. So far, I've only found it appropriate to learn, and look out for AFFORDABLE deals (that haven't manifest themselves yet). I make a middle class income and haven't settled in the BEST financial budgeting situation. But i have DECENT CREDIT (+750 Score). I have my own +$300k mortgage and a family I'm responsible for. Now, I've been propositioned to help my parents purchase a house because rent is raising hundreds of dollars a year at their current residence. First I panicked, then I thought this could be an opportunity. Not soon after, I began to think of all the doubts. THE RISK. If I found the right place, we could make their $7k/month income work, but what if the most unfortunate were to happen and they died. I'd be left with a mortgage I definitely could not afford.

As you can see, I haven't crunched the numbers yet, because the idea is still emotional. If anyone has any advice to clear this cloudy situation, I would be grateful. Thanks.

[Von S.]

With 7k a month, why don't they buy their own house?

I rent to my parents, but they are somewhat deadbeats and on top of that there's some filial piety cultural stuff I have to deal with-- essentially, I rent to them knowing I am subsidizing their lives.

You can balance it out by buying a multi-unit with decent returns. That way, if they are like my parents, you won't feel like you're not earning something on your cash with the returns from other renters.