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Ask Dave

Moving in With Dad?

Steven is 24, divorced, and working with his father in an electrical business. They live together and want to buy a house. Due to Dad's bankruptcy, they would put it in Steven's name. Should they do this?

QUESTION: Steven in Tennessee is 24, divorced, and working with his father in an electrical business. They live together and want to buy a house. The house is $180,000, and due to Dad’s bankruptcy, they would put it in Steven’s name. Should they do this? According to Dave, Dad won’t like the answer.

ANSWER: Your dad has gone through a really tough time losing everything. You’ve just gone through a tough time with a divorce. You are two single guys running a business. This is not a formula that is going to work well for you to own something together. I think both of you are better off to spend some time financially and emotionally healing.

What I would do is just go make some money and pile up some money. I could easily visualize that you are remarried in four years, and maybe your new wife won’t like your dad living in the basement. It’s not just possible—it’s likely. Also, how uncomfortable would that be with your dad, who has built his business model around the fact that he’s in your basement, and you don’t want him there anymore?

You’re really not buying the house together. You’re putting it in your name, because he has no credit. This sounds like a good way to end up really angry at each other later. What I would suggest you do is continue to pay your current rent to operate the business. I might look for a building that you can do the storage and run the business from.

Get a cheap little place to rent, and your dad can get a one-bedroom place and spend a couple of years piling up some money. Then let’s revisit the idea of whether the business needs to have a place to operate that’s the same as your home, who is going to own the business and stuff like that.

You need to look out there and think of how this is going to look in five years. Today, what you are describing makes sense. But if you project it out just a little bit, I see a lot of possibility for hurt feelings and messed-up deals. I just wouldn’t do it. I don’t think it’s wise for you to buy a house today. I don’t think it’s wise for him to buy a house today, and I know it’s not wise for you to do it together.

If you do this, you are trapped together. Right now you are not trapped. It works as long as it works. If it reaches a point that you can’t get along enough to work together, you can just go someplace else, and it doesn’t destroy him. You don’t want to trap people—especially people you love—into deals.

When you are trapped, it changes the relationship. You can’t get away, and now it’s all in your belly, and it’s churning. I would not do this. It felt like a good idea one morning when you were drinking coffee, but as I project it out a little bit, it scares me to death, and I wouldn’t do it.