What's right thing to do?

[Rose De Luca]

Hi looking for opinions cause I'm confused.

Bought a brand new house with my brother and his wife. They will be the only ones living in the house.

Do we split everything equally ie. mtg or should they pay more cause they are living there? My husband says they should be what is reasonable rent in the area and the balance of mtg payment split. They pay bills and we split taxes.

So if our mtg payment is $2500 and rent in the area for a 3 bdrm is $1500.00 than they would pay $1500.00 and remaining $1000.00 we split. They would pay bills they consume in the house and we would split taxes. Does this sound fair? Or should everything be split equally?

Any advice would be appreciated.

Thank you in advance.

[Patricia Steiner]

I would look at it a tad differently.

You bought it as an investment.  There are 4 partners.  Each partner has a share of the mortgage payment, insurance, taxes, and maintenance.  

Question:  So what is each partner's carrying cost of the investment?  If the total monthly expense is $2500, each partner's share would be $625 (or $1250 per couple) per month.

Rent.  What is fair market rent for a comparable property in that market?  If the answer is $1500 a month, then whomever rents it - partner or otherwise - pays $1500 a month.

Figuring the bottom line:

The renting partners would pay $1500 a month.  The remaining $1000 would be split four ways so you and your husband would pay $500 and the renting partners total outlay is $2000.  The reality is that the renting partners have more benefit from the acquisition and are contributing to the wear and tear of the property.  You and your husband are basically silent partners.  You could give a "friends and family" discount on the rent but you want to make sure that you're not subsidizing their rent payments...at some point, you may want to sell the house or rent it for a higher price and that becomes problematic when the other party may not be able to find comparable housing at a comparable price.  (They've become accustomed to the lifestyle you've provided...).

Just one opinion...I'm sure you'll get a lot of others and that's the great thing about BP.  Congrats on your acquisition!