Case Study #10: Should Josiah buy his parents a house?

house in iowa

No! No, no, no. A thousand times, No!

Or maybe, just maybe…

For this blog, two great things about the Ask jlcollinsnh posts are that they help me understand the real world concerns of my readers and they provide ideas for a steady steam of great Case Studies. These are ideas and topics I would have never thought of on my own.

But today’s is a little different. This one gives me a chance to share a story I’ve had pending in the files for over two years. Josiah is contemplating a move quite similar to one I made long ago and his asking about it was just the spur I needed.


Hello Mr. Collins

I have loved reading your website! It is the exact information that I have been craving in regards to where the heck to park my money.

My wife and I are on the road to FI. We have a few more miles to go (10-15 years) but we are on our way. My goal is to never “have” to work a day after my 42 birthday.

With all that being said, my parents are 50 and 53 respectively and are not destitute but pretty poor. They have jobs that are a bit above minimum wage but absolutely nothing in the realm of savings or pensions.

My wife and I have realized that we will be ultimately responsible for them in roughly 30 years as my brother is not in the best boat financially and has expressed disinterest in taking care of them, because of different family issues.

I am going to help them get a Vanguard account and put a bit of money aside for them each month. The big problem is that they are currently spending 600 dollars a month in rent in the middle of Iowa, which is normal if they had kids living with them, but as my brother and I are gone, it’s a bit much, especially with them making just over ends meet.

My question is would it be prudent to buy a cheaper property and rent it to them so they could cut their rent in half, and then after it is payed off when they are in their 80′s that expense will basically be non exist? There are plenty of houses in their community that could be had for around $50K-$70K.

I have read your post about how real estate is not the best investment and I am realizing that I really don’t want to make a habit of getting rentals, but I am wondering since you have owned a house before, is it worth the extra costs that will be associated with owning a home, to provide that stability for them, or should we just find them a cheaper rental?

Thanks for all you do,


Welcome Josiah…

…and thanks for the kind words! Glad you found your way here and thank you for the question. I have actually long been planning a post about the time I did exactly what you are considering. It was a major mistake and I’ll share that story with you, along with some thoughts as to how you might evaluate the decision for your unique circumstance.

But first, congratulations on having your feet firmly on the path to financial independence! And for being clear-eyed enough to see that your parents are not and that this is likely to become your problem. The good news is you will have positioned yourself well to help.

Here’s my tale:

Back in ’79 I was young, single, renting, making good money and very foolish.  I bought my mother a condominium, for reasons much the same as yours. It was just about the worst decision I could have made, both financially and psychologically.

My father died in 1974 and in 1976 my mother sold their house and moved to Florida to escape Chicago’s winters and to be closer to her retired brother. She took the proceeds from the house and invested in some dividend paying stocks to supplement her Social Security. She found a lovely apartment near her brother and settled in.

Unfortunately, her stocks failed to keep pace and her rent continued to rise. By 1979 she was expressing grave concerns.

Now, with the benefit of hindsight I can see her concerns were greatly overblown. But at the time I got swept up into them, as us good sons are prone to do. Plus then, like now, (like always, really) the vested interests in the real estate business were relentlessly pounding the drum of how wonderful owning property is.

On a visit I rashly told her I would solve her problem by buying her a condo. I gave her a budget of 40k, a fairly hefty sum in those days, and told her whatever she found in that price range that she liked was fine with me. We agreed she would pay me her current rent of $300 a month and I would absorb the difference and all future cost increases. Not surprisingly, this worked exceedingly well for her. For me, as we’ll see, not so much.

She found a beautiful 2-bedroom, 2-bath unit in a very nice complex. It was a step up from where she had been and it came in under budget. It looked like a pretty neat, if expensive, solution.

To see just how expensive, let’s run the monthly numbers:

$390 — Mortgage payment (interest rates were much higher in those days)

$125 — Association fees

$50 — RE taxes

$565 — Total

So I knew going in I would be supporting mom to the tune of $265 a month. And I was good with that.

But there were two big things I naively hadn’t counted on.

First, I was now her landlord and as such she turned to me for improvements on the property. Not all at once, but over the years:  New appliances, carpet, painting and other costly stuff I don’t remember. Maybe because they paled in comparison the the second thing I hadn’t counted on…

men at a table

The Association

See, this was a building owned and operated by geezers who were retired and had cash on hand. They wanted to keep their money in their own pockets as long as possible and so were loathe to pay a little extra each month to build a contingency fund. The monthly assessments covered only the monthly costs.

So about once a year, sometimes twice in the bad years, I’d get a notice announcing a “Special Assessment” had been approved to re-pave the driveways or re-roof the buildings or some such, and telling me my share. Typically $5-6000. Oh, and by the way, it is due next Tuesday.

Now this is a perfectly fine way to do things for retired folks with money in the bank. But each notice sent me into a mad scramble to pull the cash together in time. At least the first couple of times. After that, I created my own contingency fund.

My mother lived there for about seven years, until 1986. Each year, of course, these costs marched ever higher. Fortunately so did my income, but the cash hemorrhaging was always a shock. Meanwhile, Florida went into one of its routine real estate collapses, just in time for my sale of the property.

So it was financially ugly. But expensive as it was, that would have been OK. It did solve my mother’s problem. But then there was the psychological factors that came in to play. Those started before the condo was even bought.

The Saturday after I returned from my trip to Florida, the one where I had told my mother I would do this, I got a call from one of my sisters. She was not happy.

She got it into her head that somehow I was exploiting our mother and that I was going to make a financial killing on this condo. Now I had no idea at the time just how financially ugly it would get (had I known I would have run for the exits) but I could certainly see that there was no monetary killing to be made.

When she got done yelling at me (and this took a while) I told her I really didn’t want to do this at all (I didn’t) and if she wanted to I would be happy to step to the side and out of her way. Unfortunately, she said she couldn’t afford it. She later suggested we buy it together but, after all the harsh words, I was uninterested in a partnership. That might have been my only smart decision in this sorry affair.

My other sister was considerably more financial savvy than either of us. She could see both the hole I was digging for myself and the way it would ease her share of the burden of providing help to our mother.

Now here’s where the psychology gets really interesting. My mother was a smart woman. She understood intellectually that I was supporting her to the tune of hundreds of dollars each month, thousands each year. But she never saw that money. What she saw, and felt emotionally, was the $300 check she wrote and mailed to me each month. Wrote and mailed to (cue me twirling one end of my imaginary handlebar mustache) her landlord.

Meanwhile, when my sisters would visit once or twice a year, they’d slip her $100 to “help with the extras.”  A kind and generous gesture that she very much felt emotionally. And, of course, when I’d visit I would get to hear in detail just how kind and generous my sisters were and what a blessing in a mother’s life such children are.

Now, a better man would not have been bothered by this. I am not that better man. I was the guy doing the heavy lifting.

As a postscript to this story, and in fairness to my sisters, when my mother took ill and moved back to Chicago for the final two years of her life I was living in Cleveland. The heavy lifting of her care fell to the two of them. In retrospect, mine was the easier burden.

So that’s my sad tale. What should I have done instead? That’s easy. I should have said to mom on that trip: “Don’t worry about your rent increases. Just let me know and whatever the amount over the $300 you are now paying I will send to you.” Much cheaper for me. Better psychology, too.

Oh, and then I’d’ve had plenty of spare hundred dollar bills around to slip her on my visits. You know. To help with the extras.

So, enough about me, Josiah. You can decide for yourself how much of this little tale potentially relates to your situation. But here are my thoughts for you….

First, buying your parents a house is likely to turn out to be much more expensive than you might anticipate. While you won’t have association assessments, you will have an endless parade of repairs as all houses require. If your parents are unable to handle these repairs or arrange for them to be done, those efforts will fall to you. As will the costs.

And, of course, the house will have all the drawbacks I describe here: Why your house is a terrible investment.

So why isn’t my answer a simple short and sweet:

Don’t do it!!?

The $600 rent and the houses available for 50-70k you mention is why. This suggests rentals are thin on the ground and pricy, while houses are easily and cheaply available.

You may have read this post: Rent v. Owning, opportunity costs and running the numbers. If not, please do. In it I describe just how to evaluate your choices and compare them financially.

In my experience, renting is most often less expensive. But not always and, from the rough numbers  you’ve shared for where your parents live in Iowa, maybe not for you and them. So run the numbers and see where you stand. Owning just might be the less expensive choice.

But for me, the financial case for owning would have to be very compelling before I’d accept the downsides in this situation. When I’ve owned houses they were expensive indulgences I could afford and the benefits made me willing to pay the costs.

In your case, supplementing your parents rent might be the expensive indulgence. Only the numbers will tell. But if renting proves more costly, personally I be willing to pay a fair amount to avoid the hassles and pitfalls.

One final thought.

You mentioned your intention to open and fund a Vanguard account for them. This is a fine and generous idea, but I’d keep it in your name. Unless your parents are willing and able to embrace your style of fiscal discipline, and that doesn’t appear likely, in their name such a fund would be at too great a risk of being dissipated. Plus, if held in their name, upon their death your money will go to the heirs they choose.

Held in your name you retain control and your parents are spared the responsibility while still enjoying the benefits. Perhaps this is the greater kindness.

Good luck and keep us posted.

More Case Studies

Addendum #1:

At the same time as buying my mother’s condo I was buying one of my own. You’ll find that little adventure recounted in this series of posts: How I lost money in Real Estate before it was fashionable.

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  1. jim says

    Oh hell no! You should absolutely NOT buy your parents a house. OMG! Seriously?????????????? Take them to the library and get them a copy of Dave Ramsey’s books. Get their butts on a budget and tell them they can live off of that or they can blow everything. YOU should not be doing anything else for them. If you do – you do it at the risk of your own family’s sanity.

  2. Michael Crosby says

    I really like the case studies Jim.

    In such an emotion filled situation, it’s easy to make a quick decision that has lasting and dubious results.

    So how’s your relationship with your sisters?

  3. aspiringyogini says

    Hi Jim,

    I really enjoyed this story as I have just extricated myself from providing housing for three different family members. In the long run, they ended up resenting the help which absolutely hurt our family relationships. Perhaps, it is better to ask the question, “How can I help?” rather than deciding how to help on your own with the resources you would like to provide and may cost us less in the long run, as it did for your sisters.
    Yes, like Michael, I’d like to know how things turned out with your sisters and your relationship to them. Siblings are those relatives we are likely to be around the most in our lifetimes and so they are very important!


  4. cgk says

    My mother has been wanting me to do exactly the scenario you described – buy a condo to rent back to them. I’ve considered it, but I’m running the other direction after reading this. Though yes, their rent is steadily increasing, for now they can afford it and if they reach the point where they can no longer afford it then I will step in to supplement. Thanks for this!

  5. SavvyFinancialLatina says

    Thanks for the advice. I’m going through a similar situation. Not right now, but I know it would have been a contemplation in a couple of years. Better to not be the landlord, better to just give a fixed sum.

  6. Fatchance says

    No good deed goes unpunished right Jim? I certainly hope that overall you do not regret helping your mom even though it did not work out as planned. You were a good and kind son looking out for his mom. There should be some capital there when you’re standing at the pearly gates :).

    I have to think there is some middle ground here for Josiah. I am assuming his parents are hardworking salt of the earth type folks who just do not make a whole lot. With a break, they could be set up for a better life.

    Let’s say Josiah can find a good house right in the range he said was possible around $60K. How about a onetime gift to his parents of $12K for a 20% down payment? A 15 year fixed loan would make his parents payments about $370. Josiah and his parents could discuss putting the $230 saved in rent in an ‘escrow’ account (a basic savings account used only for taxes, insurance and repairs). Then the parents have their own house that they paid for and took care of that is free and clear when they are in their 60s. No checks going to Josiah. Josiah still has a lifelong satisfaction of helping out his parents.

    Anyway, I am just spitballing and Josiah has a lot to consider before jumping in. I am certainly no expert but I have an aging mother in law myself. I offered to pay off her house so she would not have to worry about payments for the rest of her life. I too got the suspicion and was yelled at that I was taking advantage of the old lady from the mother in law and my wife siblings. I quickly (and gladly) withdrew my offer. Now when the siblings start discussing moms financial situation and how bad it is and who needs to help, I just stay clear of the discussion or any emotional involvement. Their yelling at me saved me a bunch of money and getting involved in family issues. Guess I was little luckier than Jim in that little slice of life.

    Josiah, I certainly hope you keep Jim posted on what you decide to do. I wish you and your parents the best. You to are a good, kind son for trying to help.

  7. RobDiesel says

    This family had been like family to me. I’d lived with them temporarily upon relocating back to the US, and taken their kids to school, we’d worked together, built cars, motorcycles and a barn/workshop together.

    In 2006 they fell on hard times. They had always made so much money, so they lived it up. When the source dried up, they just went broke and everything fell apart.

    Being that they were as-good-as-family to me, I did the stupid thing and loaned them $12000.

    Since then, their times got worse, they divorced, and hubby preferred to cut off all ties with people he owed money. Wife still tries once in a while.

    I’ve recovered $3000 to date.

    The very expensive lesson was learned that if they need help, I have a guest room. I can go and buy groceries. Since they can’t handle money they owe to banks, or curb their spending (which is why they are in dire straights!) they certainly can’t handle owing ME money. There’s always the “we’re FAMILY, of COURSE I’ll pay you back!” but it’s a matter of when. It can always be later, because we’re FAMILY.

    Don’t get me wrong, they’re suffering far more than I am, but the lesson is to not do it.
    Don’t enable the bad behavior, but help THEM instead.

    Buying a house for your parents is nice, but expect to pay the entire mortgage on your own. Consider the house a gift if anything. Or just tell them to pay you, and fully expect them to not be able to afford to pay you and just stop payments.

    Keep the house in your name, keep the utilities in theirs.

    Nothing sucks worse than seeing people owe you money, complaining about not affording food, and then buying new backpacks for the kids “because it’s a new school year and NOBODY can use the old Spiderman backpacks THIS year”.

  8. Tara says

    Another cautionary tale: my SO when he got divorced had an ex who was bad with money. He thought he was doing her a favor by paying off their house she got in the divorce settlement. Wrong. She proceeded to take out mortgage after mortgage on the property he worked so hard to pay off for her so she would be safe, and she finally lost it in foreclosure after pissing all the money away on crap. Hard lesson learned.

  9. Liz says

    I always look forward to learning something when a new post from you shows up on my blog reader.

    As the “responsible” sibling, I know that caring for our parents will fall to me one day. I appreciate you sharing your story. I’ve added it to my mental filing cabinet for future reference. Great job on the blog!

  10. dude says

    Ouch. Not quite the same, but my brother finds himself in a marginally similar situation a s a result of his wanting to be a good son. Mom and stepdad retired, don’t have a ton to live on, but are okay. Stepdad has a life estate in the home they live in (in the northeast) that goes to his daughters when he dies (2 from a previous marriage, 1 from his union with my mom) — this was specifically done by his mother under the influence of his meddling, nasty sister to ensure that my mother did not get the house (his parents had bought it from my stepdad to shield it from my stepdad’s first wife during their divorce). Anyway, so the end result is my mom will be homeless when stepdad passes. Stepdad is not exactly a healthy man (he takes gobs of pills for various (self-induced) ailments like hypertension, diabetes, and others). The parents have always wanted to winter over in Florida during retirement, but really didn’t have the money to buy their own place. Enter my brother, interested in having his own second home in Florida where he can take the kids for beach vacations and do some golfing, and hey, real estate prices are bargain basement low after the crash — so he offers to buy a place with them (they pitch in a small sum for the downpayment) that they can live in for a couple months and he can use during the kids’ school vacations. Well, parents decided after spending a month or two there the first year they want to spend a full six months down there (they love it there), including during the time my brother’s family wants to be down there. He’s pissed they’ve decided to live down there half-time, and he tells them they have to vacate the place when he comes down with his family. That of course doesn’t go over well with the parents and they are pretty butt-hurt about it. He really regrets getting into the whole deal with them. The moral of course is always be very, very careful when getting financially involved with family.

  11. cv says

    Dear Jim

    What I like in particular about your postings are the details with which you recall your own life events; they are truely like guiding lights that I am collecting piece by piece. Looking forward to your book- when is it coming???!!!???

    • jlcollinsnh says

      Thanks cv…

      I appreciate you letting me know.

      I always hesitate on those, wondering if anyone would really be interested.

  12. jeep says

    Aged 25, I needed to buy a car. My parents knew an elderly lady who was going into a care home and needed to sell her fifteen year old car. She wanted $750 for it. My dad told me I could afford to pay $1500 for it and I would be taking advantage otherwise. (This was a very financially savvy lady who had done bookkeeping at my mother’s school.)

    Two years later, I wanted to sell the car. My dad told me to sell it to my sister for $750, because she couldn’t afford any more and it was now a seventeen year old car. Six months later, the car was damaged and the insurance only covered $500 after deductible. My dad told me to refund my sister the remaining $250.

    The second car I bought cost $15000 (yes big increase). For various reasons, we had to sell it two years later. We wanted to sell it locally but my dad insisted that he should buy it for $10500. For four years he never paid us a penny. My wife got madder, and madder. Eventually he gave us $7500. When we asked where the other $3000 was, he said the car had depreciated that much over the last four years.

    Now, maybe my father is just an asshole (he is – plenty more stories), but for me the lesson is clear — don’t ever, ever, ever get into a situation where you’re subsidising your family, particularly when you’re being emotionally blackmailed into it on the basis that because you earn more money than them (thanks to a 60+ hour work week), they fully deserve a sizeable piece of that income.

  13. Mr. Risky Startup says

    Do not buy your parents Ramsey book or give advice unless they ask you for help. Do not buy them a house either.

    Instead, think about how much you can afford to give them as an unconditional gift for what they did for you, give, and never ever ask what they did with the money. Even if they take it straight to casino, don’t say a word.

    Other than unconditional gift, money should never enter your relationship with your family – in most cases it will produce exactly opposite result from the one you were hoping for.

    • jlcollinsnh says

      I agree.

      If you are going to give, give unconditionally and without expectations.

      This includes gifts other than money.

      But it’s hard to do.

  14. Linda says

    Excellent post, thanks for this insightful window into your life Jim. Perhaps you can save a few families from the heartache with this post.

    I’m also eagerly waiting for the book 🙂

    I have a similar situation in my family – my Dad is supporting my two brothers who can’t hold a job for more than a few years (and every time they quit/get retrenched it takes longer to find another one). He eventually bought them a small duplex to share (2 bedroom), because he feels it’s better paying for the house than throwing money away for their rent. However, house is in his name, he is insisting on rent when they eventually get jobs, and buying is better than renting at the moment in his area.

    He is very upset when he sees them drinking in the bar down the road however… drinking his “rent” away.

  15. Done by Forty says

    Incredible story, and one I’m glad to read now before I’m tempted to do something similar for a family member. The psychological irony of the situation would be really frustrating for me, but it’s understandable. The help you gave your mother wasn’t as visible.

  16. jlcollinsnh says

    Thanks everybody for your comments and for sharing your stories.

    For those who asked:

    My sisters and I are no longer in touch, but this has to do with many more issues than the condo. Although it was the reason that one sister chose not to attend our wedding. Last I heard they were also not in touch with each other. Please don’t view this as a sad thing, I don’t.

    I hesitated before including that part of the story, but felt it would be incomplete without it.

    I have no idea if either sister reads this blog or even if they know it exists. Who knows, perhaps if they do they’ll add their perspective.

    As for the book, progress! The rough manuscript is with my editor and he has already returned his pass at Part I. I’ll be taking it with me to Mexico/Guatemala (leaving this afternoon) for review and he promises me he’ll have the rest ready by the time I return in April.

    Still, there will be lots more editing and production left. But it is beginning to look like it will actually happen.

    Thanks for the encouragement and interest!

  17. Mark A. says

    Jim, It’s brave of you to describe your relationships and it makes you all the more real since most of us have families and, therefore, challenges somewhere in that web of people. What I was thinking about while reading your post, as I often do, are the lessons and insights I have observed among people on the other end of the financial spectrum from the poster’s parents through my profession as a fundraiser for major non-profits. It’s not necessarily a much prettier picture among the super-wealthy. Imagine your family. Now imagine that one of you, typically the father, is a stupendously-successful business person worth $100 million plus. Money pervades all aspects of your family, its status and reputation and most everything seems to depend on keeping that fire hydrant of cash flowing and yourself in favor with the “fireman”, if you will, perhaps in competition with other family members. The central problem is, just like tthe general American population, talent in the family with money management is unevenly distributed because most people only value spending and consuming. Restraint is not a valued or inherently understood quality, except by the patriarch/matriarch who created the wealth, and this difference creates tension (“They are drinking away my rent money” except it is in the millions). I could go on with the often ugly wealthy family dynamics I see but my point is thhat there are people who are talented with money and somehow have well-developed qualities of self-restraint, delayed gratification and long term investment mindset, like many of the people who read this blog, and there are people who simply do not. The former seem much more rare than the latter. I guess my insights from 20 plus years of this work include the view that there are many, if not most, people for whom giving them money really does them no favors. It upsets their own “balance” and yours with them. I should say, I also work with very wealthy families who seem to have good money values and disply social responsibility leadership throughout and are very generous, in part, because they can afford to be. Second, talent with money is rare, like talent with making music or doing sports – most everyone can improve with effort but, generally, family wealth dissipates in three generations (“shirtsleeves to shirtsleeves in three generations”, as the old saw goes). Lest you think I’ve hijacked your column to spout unrelated opinions, I just wanted to express how it is terribly interesting to me how money, and money problems, are “scalable” with much the same challenges appearing at the bottom and top of the income spectrum. Like you found with your condo, sometimes having a bit of extra coin to help someone who is less able to handle it (whether a house or a trust fund) does not work out as intended.

  18. Big Guy Money says

    In this situation the saying, “Give a man a fish, feed him for a day. Teach a man to fish, feed him for a lifetime” seems to apply, although not without reason. We’ve provided some support for our family, and I don’t think we’d do it again. I found myself critiquing every purchase, every meal, etc. Ours was small-scale. Josiah is on a whole other level.

    Good luck with whatever you decide Josiah. It’d be neat to read a followup at some point.

  19. ThaRealDavidson says

    Josiah has no information that his parents want or need help right now, right? So that’s the first reason not to do this. I’d highly recommend reading or rereading the ‘economic outpatients’ section of The Millionaire Next Door before thinking about doing anything like this. There are sooo many ways this could go bad, starting with Josiah’s parents feeling they are an object of pity for him.

  20. Chris K says

    As a person with parents in their 60’s, this is a brilliant and insightful view into how something so worthy as helping your parents can be punishable.

    As for me, I try stay away from money and business from people I actually like as it seems it can end badly more often than not.

  21. Walt says

    I’m actually in much the same boat as Jim was, but without the $300 rent coming in.

    We bought my mother-in-law a condo and pay the HOA for it to the tune of $350 a month plus debt service of course. We also pay for cleaners to come in once a month, because she is an awful housekeeper.

    She, of course, has zero savings, doesn’t work, and lives on social security of around $750 a month.

    Fortunately our association is the opposite of the one he describes – the HOA hasn’t gone up in three years, and there are no special assessments. As with many condo boards they’re a bunch of kooks, but they’re very careful with the money. One of them wanders the pool area over the summer yelling at people who leave the outdoor shower running too long.

    I look at the condo when I’m visiting, though, and I wonder how long until she starts complaining about the ancient carpet and other things – but the carpet was in very good shape when she moved in. Add in a woman who flat out doesn’t clean, her piggy 12-year-ol grandson and two cats who pee everywhere, and things don’t stay nice for long.

    She has occasionally said things that make me think she believes this arrangement is somehow to our financial advantage. Of course, she hasn’t made a sound financial decision in her whole entire life, so there’s that… 🙂

    My strong suggestion is to NOT buy your parents’ housing. Go ahead and subsidize it if needed but it’s not a comfortable place to be.

    • David Wendelken says

      Next time she suggest the condo is to your financial advantage, suggest she move somewhere else if she can find a better deal. And if she can’t find a better deal, you expect a sincere “Thank you” or she can move out anyway.

      My mom and dad taught me not to put up with passive-aggressive excrement (or any other kind!) from anyone.

  22. DR says

    I posted on the MMM forum and someone awesome replied with this link. My situation is similar but we’re not buying the house for my MIL. We are all going in on it and she will live with us until she passes.

    My concern is that I still am 12-15 years away from FI and we will have monthly payments for the house. Also, since the house will be in a different country I will still have rent to pay here in the US. I don’t feel ready but MIL is retiring is 4 years and my husband wants her to have her own place.

    Any advice or thoughts would be appreciated.

  23. VancouverBob says

    Thought I’d write in a different perspective. I have successfully survived doing this twice now and come out ahead both times, but I think the difference is that the places I bought were in a good location and likely to appreciate in value and I did some homework to assess the worst case scenarios and whether I could accept the risk.
    The first I bought in 2001 for my son, who was basically living in an attic where the landlady would occasionally let herself in when he wasn’t there. When I found out how much he was paying in rent I flipped! I asked if he’d pay me the same rent if I found a place we both liked – it had to be cost neutral – and he agreed. I bought a brand new condo in the same area which is very trendy (using equity from my home as a down payment) and when he moved out of the condo two years later I was able to rent it out for even more – averaging a profit of $7K/yr or more. Next year we plan to sell it for at least 2.5x what we paid for it and expect it to go quickly. I will invest in REITs instead and give up the responsibilities of landlord!
    The second one (also leveraging my home equity), I bought for my mother who is a pensioner. She was living at a friend’s house but felt she couldn’t have anyone over and was asked to disappear when this friend had people in. She tried finding another place but either the rent was too high or they wouldn’t accept pets. She loved the condo I picked, it was in a great location in walking distance to shops, library, senior’s centre, her friends and her doctor; it was the nicest place she had ever lived in her life plus there was no problem having a little dog. The rent she paid was what she was paying before and it put me in a slightly negative cashflow, but the value of the condo was increasing. What did make me nervous was an engineering report a few years later that indicated there would be some big repairs coming up. By then she was interested in moving to a retirement home nearby that better suited her new needs and I helped her do that – she remains very happy with that move, too. It took way longer to sell that condo than expected (6 months) which caused me some anxiety and $$ and the price dropped because of the engineering report, but it still sold for 1.6x the cost. Despite the -ve cashflow I came out ahead.
    I guess my advice would be to really take a hard look at things and do this only if you weren’t likely to hurt yourself badly financially (and family relations wise too, I suppose. My siblings and I haven’t had a relationship since our late teens so it didn’t matter to me). Otherwise, subsidizing the rent (I’d do that for my mother but not my son as he has more options and earning power) seems like the way to go.
    I should mention that both of these places were financed on a secured home equity line of credit and all these years I paid interest only, which is tax deductible against rental income in Canada. Just paying the interest meant monthly payments were less than half of what a regular mortgage payment would be and that is how the cashflow was +ve or only slightly -ve; I knew keeping these places wasn’t a longterm thing so I never intended to pay them off. By doing it this way it felt like I got the places for free as taken together the two increased my cashflow and both sold well above cost.

  24. Megan says

    I don’t know what kind of bad quality houses you’ve been buying that you constantly had an “endless parade of repairs”, but i’ve been in my house for about 12 years and have called a professional to fix something less than 5 times. The last one was an electrician because there were no grounded outlets on the main floor. Even that one doesn’t even count as a repair, more like an upgrade.

  25. A says

    Wow, thank you for this. I stumbled on this just now after finding you through MMM.

    For over a year I’ve had essentially no contact with my mom after telling her I wouldn’t buy her a house. I set myself up for it when, several years ago, I mentioned the possibility (I knew it was a mistake the moment the words left my mouth, but couldn’t unsay them). This was not long after I’d come into a sizable inheritance on my dad’s side and didn’t have a whole lot of financial savvy. Having grown up with little money and with a mom who is perpetually broke, it’s taken years for me to understand the value of what I now have and how to manage it. I’m still learning. I consider myself happily and comfortably FI mainly because I live outside the US where my dollars go further, and live pretty simply. However, my income is pretty low (at this point, by choice, although I do look forward to increasing that in the next few years and dropping my withdrawal rate).

    I have helped my mom in various ways over the years… most recently paying for a professional course and a new laptop. But I realized that if I bought the house she was looking at, the purchase price was just the beginning of a deep dark hole. The property taxes alone would have been a third of my current yearly withdrawal amount. And in addition to my mom having no income, she also can’t really deal with stressful things like home repairs and was in no way considering any sort of venture like, say, a multi-unit building for her to manage that would maybe help keep it from being a total financial disaster. Or even renting out the extra bedroom. Basically she had no plan, no income, and no intention of contributing in any way.

    When I told her it didn’t make sense, she flipped out, and then tried to make her reaction my fault (for being too “businesslike”). When I offered to help her with rent for a couple of years, and to help with appointments with both my financial advisor and a therapist, she flipped again.

    So, no burden of a house right now, but also no relationship with my mom. I honestly believe this moment was coming anyway, because of family codependent patterns, but I question myself every day. My consolation is that I will actually have the money in 10 years to help her when she really needs it, and hopefully by then we’ll have a different dynamic.

    All that said, once you make the offer, it’s really hard not to follow through. So think really really carefully before offering anything at all. As my financial advisor has told me: You can only increase the amount of help you give, you can’t decrease it. And as far as houses go, you can’t consider it an investment if you can’t sell it at any time for financial reasons. With parents living there, your choice is to stay the course or leave them homeless. In my case, I think buying that house then would have been enabling more than actually helping, and would significantly inhibit my plans both for caring for her in the future and my own financial well-being.

    Nevertheless, I’ve really struggled this past year and it’s helpful to hear other people’s reminders of so many reasons not to make this kind of decision.

    • jlcollinsnh says

      Welcome A…

      …and thanks for sharing your cautionary, if sad, tale.

      For what it is worth, my guess is that the strain of having a house would have also driven a wedge between you and your mother. Maybe even a bigger one.

      Good luck.

      • A says

        I’m sure that’s true, which is another reason I think I made the right decision.

        As VancouverBob (above) and other people I know prove, some families can make it work. But in my family setting boundaries is still a disaster-prone activity, and I would have to be setting a lot more of them if I were now saddled with a house. So yeah, it was kind of a lose-lose situation.

        It’s not the money that’s the problem… it’s the way it forces you to take a stand (or not) and becomes a touchpoint for existing disfunction. Great if that’s what you’re looking for – but good to know ahead of time!

  26. Jone says


    Thank you for probably saving my butt today. I read your post several months ago and filed it away somewhere deep in my hind-brain. Your words of wisdom hit home today.

    My mom retired about a year ago. Most of her net worth is currently locked up in various real estate properties which generate a small but reliable and sufficient income for her current needs. However, just learned that needs some cash for an unexpected, and very expensive, dental bill. Unfortunately, the dental work needs to be done sooner rather than later so she needs to liquidate some property to generate the cash.

    She offered to sell me her 50% stake in a property she jointly owns with her sister, my aunt, for $19k. The house is owned free and clear (was my grandfather’s) and is now jointly owned by my mom and aunt. My aunt lives in the home and pays my mom rent equal to ½ the expected income if it were rented on the open market. The house isn’t anything special but Mom wants to keep it in the family for sentimental reasons.

    Assuming I took a mortgage for the $20k needed to buy mom out and roll all closing costs into the note, my upfront out of pocket cost would be $0 and my monthly cost going forward about $120/month (high estimate). On the other side, my new income would be $350 per month which is the amount my aunt currently pays my mom. So, net income for me of ~$230 per month give or take depending on the final details. My aunt has lived in the house for several years and is always on time with her payments.

    With those numbers, and that kind of tenant, I almost said yes. But….my memory served up this post. Your experience really made me stop and seriously consider the deal from several angles….with all two of my remaining fore-brain cells.

    After thinking on it a while, I suggested to mom that she ask my aunt to purchase the remaining ownership. My mom would get the money she needs for her surgery now and my aunt’s monthly outlays for her “rent” will decrease nearly in half with full ownership. My aunt might decide to sell (unlikely) but I had to explain to my mom that I would probably sell the place myself if I ever assumed full ownership.

    It was a hard conversation to have. My greedy monkey mind wanted the extra income. Explaining to my mom that I don’t have any sentimental attachments to my grandfather’s house was also hard. But, I didn’t wake up this morning planning to become a landlord. And, thanks to you, I think this will work out best for all three of us.

    • jlcollinsnh says

      That’s a great story, Jone…

      … and I’m pleased to hear I might have played some small, helpful role.

      Thanks for sharing it!

  27. a woman says

    Yours experiences really made me stop…. my mom (early retired) had some financial ideas (to sell her aprt. to give money to my bro and to move temporary to my bro, same to sell the property of my grandma … ) and to ask my financial help to do something else…
    I read your article several months ago, and I read it now again, same the comments. I will say no to my mom. Why? My financial moment is bad (I just paid my first 2 months of mortgage), no money for tv, cable, car or cabs, I pay for my grandma the health asylum. Comparing with financial moment of my mom: she has a tv, cable, she use the cab several time per week.
    Yep, it is a difficult moment for me but I was almost ready to…. my idea was to buy her a small studio (minimum necessary for a retired lady), but with a mortgage so to buy in on my name, to cover it to take a second job (aham! smart lady I am ), and to ask my mom to pay me a minimal money (let’s say 50 or 100) monthly, money to keep for hard times.

    No. I will not do it. It is the moment to say NO. Wish me luck 😀

  28. LGTran says

    Hello jlcollins,

    Long time, first time. I love the content you are putting out. I especially appreciate you sharing your personal anecdotes as I’m sure many can relate to. I am surely taking down notes for my financial journey.

    I’m halfway through your Stock Series and already sold on VTSAX. I recently started my career and have saved up enough to meet the minimum investment. I will likely open it in the coming days, hopefully before the end of the tax season.

    You mentioned in a reply to give unconditionally and I plan to do so by opening up a VTSMX account for my girlfriend (instead of that damn Chanel purse she keeps mentioning).

    In regards to Josiah opening accounts for his parents you recommended him to open them under his own name so that he can retain control to spare them the responsibility while they still enjoy the benefits.

    Would you recommend me doing the same when opening an account for my girlfriend?

    I’m assuming you would say yes. I don’t see a scenario where I shouldn’t.

    Thanks for your time and all of your wisdom!

  29. Cheryl Wisniewski says

    I just found this blog & I wish I would have read this before I bought my mom a condo.

    You hit the nail on the head with several points! The condo is expensive. What mom pays doesn’t even cover the entire mortgage. Then I pick up assessments ($215/mo & taxes ($2800/yr). Mom thinks I am getting rich on her piddly $500/month rent check.

    Just the other day she told me I had to give her $500 because she wants to install a new shower door!

    I can’t even tell you how many times she has told me,”I’m not paying rent this month.” The worst was she didn’t pay rent b/c she was giving my crack addict sister money!

    She quit working her corporate job at 55. Then she worked at Wal-mart. When her husband died she sold their home & gave half the proceeds to his children. Plus I don’t even know how many thousands she squandered on my sister. After she turned 70 she started to harrass me that I had to let her move in with me. I did not know how/was unable to tell her no.

    The condo was a compromise. But I regret it so much!

    • jlcollinsnh says

      Wow, Cheryl…

      …you story is so painfully similar to my own my guts were tightening as I read it. At least it sounds like it is better than having her move in with you. 🙂

      Perhaps you can tell her you have to sell the condo, but that you will pay $500 toward the rent in her new place? Make sure she finds/chooses it. Otherwise it will be all your fault. 😉

  30. Roy says

    In 2001 my Mom was 72 years old and still working a strenuous job at a hospital just to make the mortgage payment on a trailer in Ohio. In her off time she took care of my father who was disabled due to blindness and my brother who was also disabled due to a long ago brain injury. My mother felt she would never be able to retire. My folks were from Iowa so I thought about buying her a house out there where the cost of living was cheaper, houses were cheaper and she still had a brother and sister plus extended family. In September 2001 I purchased a house in rural Iowa for $32,000 just a few miles from where my mother was born. The folks and my brother moved in just after 9/11 and Mom could finally quit working. Mom had the time of her life, she was able to reconnect with her brother and sister who lived nearby and still had the resources to visit her children and grandchildren spread out across the country.

    Mom died suddenly in the fall of 2008, Dad passed shortly after in the spring of 2009. I sold the house that summer for $49,900, pretty impressive considering how the housing market collapsed just before I sold it. I never considered that buying a house for my parents would be an investment, but it was something I knew I could afford to do regardless of the outcome of the finances. I was lucky that I was able to sell the house for what I did, rural Iowa is somewhat insulated from the huge housing market swings the rest of the country was experiencing. So I knew I wouldn’t make much money (I never charged rent), but I also knew I wouldn’t get hurt too badly. Could I have made more by investing elsewhere, absolutely but I don’t care. The point of this is that the decision to help out the parents isn’t just a financial one it is obviously a very emotional one. When I did this the only question I asked myself was can I financially afford this without adversely effecting the security of my own family. The answer was yes, so I did knowing I would end up pushing back my own retirement by a few years. But that is OK, I gave my parents 7 good years of a happy retirement and that was priceless.

    • jlcollinsnh says

      Thanks for sharing your story, Roy.

      If you are going to buy your parents a house, yours are exactly the right reasons. 🙂

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