Not Ideal Renters
Candace is debt-free. Her daughter and son-in-law's house is in foreclosure. Candace is considering purchasing a rental property to let them live in. Dave warns Candace that this is going to end poorly.
QUESTION: Candace in Idaho is semi-retired and debt-free including the house. Her daughter and son-in-law’s house is in foreclosure. Candace is considering purchasing a rental property for $60,000 or less to let them live in. Dave warns Candace that this is going to end poorly.
ANSWER: You’re debt-free, and you’re going to go back in debt to buy a house for somebody who hasn’t been paying their bills. They’re being foreclosed on.
I think this is going to end poorly. I think you’re going to have a relationship breakdown, and you could actually sever your relationship with your son-in-law and your daughter accidentally while you’re trying to do something nice. I would avoid this at all costs.
What I’m seeing—and I’m trying to be gentle but you’re not seeing it because you love your kids, and we all love our kids—is that they made some very unwise decisions, and they compounded them with more unwise decisions. This is not who I want as a renter. Instead, I want them to learn to make some wise decisions.
If I were their mom and dad, I would not go into debt to buy them a home. What I would do is to help them get into a class to learn how to handle money, and I might give them a little money to help them get back on their feet in terms of getting into a rental that’s very reasonable and that fits their budget and their plan. But their plan can’t be he’s going to graduate someday and make money. It’s going to be how is he going to make money today to pay the bills for his family? He went back to school instead of back to work, and that’s what cost them the house. He could’ve gotten a job and paid a $1,400-a-month house payment.
They made that decision, and you asked my opinion. My opinion is I think it’s a really bad idea to borrow money to buy investment property. I know it’s a bad idea to borrow money to buy investment property and rent to someone who’s having financial trouble. If they’re your kids, it’s even worse because you’re going to end up with relationship problems. Please don’t do this.