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Ask Dave

Family Property Tugs At The Heart

Tasha and her husband are are considering buying her grandmother's home in Mississippi. Would that be a wise investment even though they don't return there often?

QUESTION: Tasha in Birmingham and her husband are building their emergency fund. Recently, Tasha’s great-grandmother passed away. The home in Mississippi is being put up for sale, and Tasha and her husband are considering buying it. Would that be a wise investment even though they don’t return often?

ANSWER: That it’s a family property does have a legitimate pull. It is personal finance, and personal is part of the program, so drama is in order. It’s reasonable to have a little bit of drama to go with this and have that pull. Financially, you would never do this. Even if you had the cash, you wouldn’t do it, because it’s not a house you would buy. If it was the house next door, we wouldn’t even be talking about it. On a pure financial basis, we wouldn’t do it. But I disagree that all of these decisions need to be made on a purely financial basis. If you were buying it without debt, I could be more sympathetic, but borrowing money to buy something that you don’t need purely because of the family connection doesn’t make financial sense. It really starts to go no in my mind.

The way I answer questions here is what would we do? We don’t borrow money for anything—even a personal residence. We’ve got a couple of extra homes—toys, I call them—a lake house and a condo in another city and that kind of thing that are just for what you’re talking about—convenience. In neither case are they very expensive relative to our world. But in both cases, we paid cash and it really is a non-issue. If you paid cash for it, I think I might be okay if you wanted to do it.

It just doesn’t sound wise. It sounds like you guys are too tight. I feel for your heart on the thing, and it is there, but I just don’t think if I were in your shoes I would do that. I know I wouldn’t because I know I wouldn’t borrow the money, but even that aside, you don’t have a big enough pile of cash or wealth to justify owning a second home at this stage of the game. Truthfully, the words that Sharon and I always use when we’re talking about this kind of stuff is it’s a toy. It’s a very large toy. It might not be as convenient as you think it is because you’ve got to mess with them. It’s kind of handy to just check into a hotel and leave and somebody else does all that. It has multiple uses. One is it does tug at the heartstrings, and that’s legitimate. I’m not saying we don’t do it because of that, but I think you’re pretty heavy on the cons on this one. That’s not to invalidate the fact that this kind of breaks your heart to hear it, but I wouldn’t do it. You go do whatever you want to do. I’m not going to be mad about it. I just think you’re too tight.