Rent home to my kids

[Mike Ash]

To summarize a long story: Daughter & her fam moved back home (with wife & I) in 2019 after son-in-law laid off. Covid hit in 2020 & he got back to work in late-mid 2020. My wife talked about selling or renting them our house so we could get a smaller home. Near the end of 2020 my wife died suddenly. Kids kept me company & daughter cooked for me, etc., while we all lived in my house. It was a blessing to have them in my house. 2023: I've met someone else. She's also a widow with a paid off house (my house will be paid off in just over a year). She wants both of us to sell & get our own smaller place. My house is now worth double what it was when the kids moved in & wanted to buy my house. My new future bride wants me to sell so we split the cost of a new place (although selling her house would more than cover the cost of a place for us-- but she wants to make it fair that we both pay 1/2 of a new place & then keep the extra $ for travel, etc.).

I can't kick my kids out-- my late wife kind of promised them our house & rent is now more than house payments (& my kids have bad credit & wouldn't be able to buy my house even if they could afford the mortgage payment). I'm not putting my kids out on the street after the house has become virtually theirs while they lived with me and my late wife & were there for me, taking care of me, when I became a widower. I need to convince my wife-to-be that renting my house to the kids would work & we'd get a monthly income when there is no more debt on my house.

My questions: What advantages do I gain from renting instead of selling? Once the title is mine, are there advantages/disadvantages to taking a home equity loan for travel etc. & let the kids rent payment cover the loan payment, or is it better to just save up the rental payments? I need to figure out how to let me kids live in my house, charge a rent they can afford (which is less than the mortgage would be), but still come out with advantages to make this work for a new life with my future wife-to-be.

I'm in serious need of advice.

[Ned J.]

Tough position to be in....

NEVER EVER EVER rent to family... EVER. It will end badly in one way or another.

My best idea....sell the house and use some of the proceeds to help get them started in a new home they can afford. Supply the down payment or a certain % of the purchase price for them. If your house is worth that much $$ now, hopefully you can swing the new house for you and a down payment for them. 

That's the cleanest plan I can think of.... its a fresh start for everyone and ends any future financial commitment being tied together.