[signoff icon=”icon-help-circled”]QUESTION: “My husband I are looking to buy an investment home and thought we would give our son and his wife the opportunity to rent it at a low rent so they can save their deposit for their own home. Can you tell me the pros and cons of this situation please.”[/signoff]
In my 27 years as a property manager, I have seen great relationships destroyed by just this scenario, I know you have the best intentions at heart to help your son but I am sure you would rather have a long term loving relationship with him and his wife, and look forward to spending time with the beloved grandchildren.
Unfortunately life does not always pan out the way we plan and you and your husband need to think long and hard about this decision you are about to make, I think buying an investment home is a great plan but it is a commercial decision so don’t let it be clouded by a heart decision.
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Investigate the possibility of lending your son the deposit with a fixed term for repayment. Alternatively buy a property with them as tenants in common and give them a leg up that way. After a period of time, they can buy you out at market price and your investment is safe.
If you do decide to go with your initial plan, I suggest you employ a great Property Manager and give them the responsibly to manage the tenancy, they must have the authority to chase rent arrears with no fear or favour, be allowed to follow the legislation and have clear and open lines of communication with all parties.
I could tell you countless stories of many years being drawn into family squabbles after the event and having to manage a no win situation for all involved after just this kind hearted gesture to a relative. Be careful and go in with your eyes wide open, look at every angle and prepare for the worst case scenario, hopefully it will never happen and the process will be smooth for all concerned.