Help Your Sister Another Way
Jeff has a sister with a disability who asked Jeff to buy a home in Phoenix and rent it to her. Is this something Jeff should seriously consider?
QUESTION: Jeff in Fresno has a sister with a disability who recently went through a bankruptcy and may be going through a foreclosure. She’s asked Jeff to buy a home in Phoenix and rent it to her. Is this something Jeff should seriously consider? Dave has a different idea.
ANSWER: I think it would be cheaper for you to help family out to just help her with her rent every so often if she got in trouble. That’s a few hundred dollars here or there versus buying a property for $100,000 or something, and you’ve got that much tied up. All she’s looking at is how much a month. You have to look at how much. If she doesn’t pay, you’ve got $70,000 hanging around your neck. If she doesn’t pay her rent, you can decide to help her or decide not to help her, and you can decide how much you want to help her. That’s a lot different than $70,000.
I think you’re going to get yourself in a bind with your sister because your sister has a track record of not taking care of money. When she doesn’t take care of money and it’s got your condo and your debt and your name, you’ve got a mess on your hands you living in Fresno and the condo’s in Phoenix. It’d be cheaper for you to help her by paying some of her rent every so often when she gets in trouble. The bottom line thing that she needs to do is you need to get her some help on learning how to handle money. She needs to go through Financial Peace University. I’ll give it to you. If you can get her to attend that, what I would do if I were in your shoes is I would say, “I’ll be happy to help you out on some things. I want you to go through this class first. In the meantime, I want you to rent an inexpensive place. Get you a good rental deal on something, and if you get in trouble, I'd rather help you with that than I would buy a condo and then you get in a pinch.” I just think it’s a bad plan. I think you’re going to get caught. As a matter of fact, I’ll give you a 90% probability you’re going to get caught. I wouldn’t do it.