Helping my kids to buy a home


Dear David,

A few years ago, we retired, sold our house, left the city and moved back to our hometown. Our two adult sons, who had been living at home, rented a house in our former neighbourhood. The lease is up, and the landlord wants to sell the house. What should they do now? I should add they both work remotely in the tech industry. – WEIGHING THE OPTIONS

DEAR WEIGHING: Your sons are facing a common real estate dilemma, and one that becomes increasingly important as home values escalate. Purchase prices in Waterloo Region have nearly doubled since 2016, which has changed the nature of our rental market. Landlords who considered their investment properties a source of passive income may now be itching to cash in on the market, which also frees them from collecting rent cheques each month, cutting the grass when a tenant doesn’t want to, or unclogging the tenant’s toilet on a Sunday night.

Your sons, like everyone else, have two options: rent or buy. Many young people can’t afford to buy, but in your financial position, you may be able to help out.

Have your sons meet with a mortgage specialist and see what they might qualify for if they purchased a home together. If their income doesn’t meet the minimum threshold but you feel like they are a good credit risk, you may decide to help them out by co-signing on a mortgage. If you’re thinking of going this route, you need to sit down and do the math as a family. It’s a tough conversation, but it could be a financial turning point. If your sons can afford a mortgage payment with you as a co-signer, you might think about purchasing a home together, as a joint investment. As parents, you may even want to throw in a little early inheritance money to get them started.

I suspect one of the things that has allowed you retire and move back to your hometown is the wealth you’ve accumulated in real estate. This nest egg didn’t materialize overnight and likely took decades to grow. Talk to your mortgage specialist and see if this might be a time to foster similar opportunities for your children. See if your sons are able to pull money out of other sources, like RRSPs. With both of them working remotely, they may be able to follow your lead and re-locate to a less expensive area.

PRO TIP: Breaking into the real estate market takes long-term planning. Thirty years ago, I needed 25 percent down to buy my first house, and I didn’t have it. I ended up buying with a friend of mine, who went on to buy their own home once I could afford to carry our joint purchase on my own.

Your sons buying a home together is like they’re buying with a friend. They may not be ready to take this step yet, but with some long-term financial planning (and maybe a bit of help), these goals may be in reach. From an equity-building perspective, the net worth of people who own their home is said to be about 40 times higher than the net worth of those who rent. Planning for home ownership is worth the effort, whether it happens today or a year from now. #Advice #AskDavid #TheNegotiator

David is a top-selling Broker in Kitchener-Waterloo Region. He works personally with you when selling or buying your home. Call or text today for your free home evaluation! 519-577-1212.