Buying a property with my daughter. Best financial arrangement?

[Anthony Pitruzzello]

I own a townhouse in Spokane. (Own=No Mortgage) My adult daughter wants to buy a home. I could help her get her own place. However, she would like for us (my daughter, myself and the grandkids) to live close together. We found a property that includes a house (for my daughter and the grandkids) and an apartment over a large garage/workshop in a separate building (for me). It occurred to me that rather than have my daughter and I each co-sign a mortgage, it might make more sense for me to buy the property and rent to my daughter. I would put the house in a trust with my daughter as executor. I would retain control during my lifetime, then the property would go to my daughter. Actually, even the rent she would pay would be essentially a forced saving that would eventually come back to her. I was wondering whether there might be any tax advantages or disadvantages to my owning the property as both a resident and a landlord. Also, I have undefined misgivings about two people co-signing a mortgage. I know nothing about real estate investment or property tax law. I’m just trying to figure out where to start in terms of figuring out what makes sense.

[Brian Kloft]

To me you are asking all the wrong questions. Those are simple financial questions. The bigger ones have to do with renting to your daughter, and her being beholden to you. Dave Ramsey has a good saying about how Thanksgiving Dinner is different when you owe money to the other person at the table. If you don't like Dave Ramsey then we can look at Big Bang Theory where Penny borrowed money from Sheldon and even though he didn't care about what she was spending or when she would be paying him back, every time he said anything she thought he was grilling her about that. 

You don't want this to ruin your relationship with your daughter. What will happen if she is late with rent or loses her job and can't pay rent for a few months? What if she needs to move to another state? What if she gets married again and he wants her to move into his place instead of living so close to you? Doing business with family can put a lot of stress on the relationship. Keeping the good relationship with her and thus your grandkids is more important that the rest of it so make sure you are prepared to give and sacrifice money if and when it is required and have certain things agreed up and in writing up front. I am not saying to not do it, but you need to have some serious thoughts and conversations about it as well as contingency plans.