Is this a bad idea or what? (Buy with fiancées parents - Canada)

[Tyler Dufty]

Fiancée and I will be first time home buyers in the near future.

Her parents have proposed the idea of selling their house and using the money, combined with ours, to put towards a property for us.

They would put up somewhere around $700k and we would mortgage the rest. $200-$300k.

They are old school Industrial Age folks who are retired and want to give us their estate when they pass on.

Is there a strategy that could provide an economic benefit?

Would it make more sense for them to gift us the money, then leverage our property for the full value?

They would be living on the property so that would rule out renting.

Or should we run...

What are your thoughts?