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This is a our situation. My mother owns a 3 bedroom house on Island and my wife and I currently rent a 1 bedroom upstairs apartment in Dix Hills. We have a 9 month old son and are running out of space in our apartment. We would like to buy a house of our own but we can't afford it because our daycare costs as much as our rent and won't be able to afford it until he goes to pre-school. Also, we may plan on having additional children. My mother plans on retiring within a year or two and she's not sure what she's wants to do with her house. We could wait until my mother retires to babysit part-time and look for a house but it won't be for awhile.

She suggested she could sell her house and we could buy a house on a large lot and build an attached in-law addition in the backyard for her to live in. We originally were planning on buying a 1 story ranch house and adding a 2nd floor for her or us to live in but we thought building an addition is a better idea. Both of us want to live on the 1st floor and we have more privacy. Building a 2nd floor on my mom's house isn't an option since we need more sq. footage. We have looked at 2 family legal houses but most of them are subpar and there are not a lot of them on the market to choose from in a great neighborhood. Also, most of them are 2 story houses and we both want to live on the 1st floor.

We currently have a realtor/broker and are looking in houses on Long Island near our jobs. 400k-500k, 3+ bedrooms, 2+ baths, .4+ acres flat land, basement. We will have a down payment of 275k. After talking to several building companies, we estimate the total cost of the addition will be 175k-200k for a 1,000 sq. ft addition.

My mother and I will be co-owners of the house, our total income is 150k (120k after she retires) and we both have excellent credit. My wife will provide add'l income as she has a full-time job.

We started looking for houses for the past few months, but I want ask if there are pitfalls we should watch out for if we like something. I'm worried about buying a house and not being able to build an addition on the property and getting a 203k construction loan. We also have to sell my mother's house at the same time.

My mother still does have a mortgage on the house but if we do find a house we like prior to selling my mother's house, we have more than enough in our savings for a down payment. Could we purchase the house with a 20% down payment and once my mom sells her house, use that money for the construction?

If anyone has any experience with our situation or insight, feel free to reply.

You'll have a real hard time finding a location on Long Island with zoning that will permit a second housing unit on the property. You may find a house that has a legal second unit that has been grandfathered in because it predated zoning regulations but they will be quite old and therefore, probably not single story houses. These would probably be in the estate areas and above your price range. You need to find an experienced agent for this task.

I assume it is a 'given' that your mother wishes to babysit. Will this be true if/when you increase your family?

Kudos for you all if this is the case; I just know that for some folks, they would rather stay working than babysit on a regular basis.

Best wishes with your plans

I highly recommend that you meet with an real estate attorney plus an estate planning attorney to learn about the issues associated with a married couple jointly owning and living in property with a third party.

I would be most concerned about what it means to you and your wife if your Mother passes while having debt that would need to be paid from the assets of her estate.

Also, what will be the ramifications when it comes to ensuring her Medicair/medicade eligibility should she need nursing home care?

If there are siblings, how will they receive their share of Mom's estate without causing the house to be sold before you are ready to sell?

What inheritance taxes should you anticipate?

How will all the financial ins and outs as well as disagreements be handled regarding the downpayment, monthly mortgage payments, improvements, increase or decrease in equity, etc.?

How will disagreements be solved if only one party wants to accelerate the mortgage payments and/or refinance in the future and the other doesn't?

What happens if the parties have a falling out? Can one party sell their part of the property? What happens if the remaining party objects to the choice of new owner?

I know you're most concerned about construction loans right now, but the above questions would scare me right out of this kind of arrangement.

This message has been edited. Last edited by: Jewel,

Jewel, terrific points they need to consider.

Here is an experience I had: I was newly divorced and my son, his new wife/baby wanted to move in since they were cash strapped. I thought it would be fun....well it was for a few months only!!! I offered to pay all bills, so they could save money for their own place, if they would just buy the groceries.

It got to the point they would not even get up with the baby at night even tho my DIL didn't work!!! I had to do it despite the fact I was working f/t and was suffering a serious illness!

They got pregnant again, and I simply didn't have room for their expanding family. They started 'trashing' my furniture cause it was 'old and they didn't like it', etc. It was turning into a nightmare.

Also they would go off, in MY car, and leave me with the baby for long periods of time.

My parents ended up saving the day by giving them a down payment for their own house!!!!

I just don't think these types of things work out that well and I certainly wouldn't advise it and would never do it again. JMHO

Wow, CJO, what a horrible experience! I hope they apologized to you since then.

Did they ever "get it together" financially or did your parents help just enable them to continue being irresponsible?

Apologize???? That would be a huge NO; doubt it ever crossed their minds what they did to me! And yes, my parents helped/enabled them for yearssssss, because they loved my son (their only grandson) so much. In my parent's late 70s, they finally had to say "we can't help anymore", and my son was actually mad.

Son & wife eventually divorced and that was another nightmare; they were both asking me for money (my parent's were deceased by now). The DIL cussed me out on numerous occasions and turned the grands against me.

I did volunteer to give son some money to get his own place after the divorce and then he had the audacity to ask for more...I said "No, I'm sorry I can't". He actually did call me back and apologize for that.

I just have to say that I never, ever asked my folks for money. I was just astounded that my son thought it was his 'due'.

How distressing. I think you've just described my worst nightmare. Was just telling my husband the other day that, considering we will have spent well in excess of $150k on our son's specialized college education by the time he's graduated, it would literally make me vomit if he blows his opportunities and tries to come back home to live. Fortunately, he is a hard worker academically. The part that worries me is that he's lazy when it comes to actual work.

Best wishes for your son!!!

Actually my saga with them and my huse had more chapters and they weren't good. I've prob said too much on 'here', so I'll just keep my mouth shut. You can email me tho if you want to know more.

Hope I didn't upset the original poster, either; I obviously have 'issues' from those tough days and became carried away!

Oh, CJO! {hugs} Wowza. A horrible story.

I agree with Jewel and others. Set a plan in motion for legalities Don't go out on a limb and invest soundly. There are still good buys in resales without buying retail.
If you build you will be building retail.

First, "neo," Welcome to the real estate boards; hope we haven't lost you since I haven't seen a post back from you since you originated this thread.

I have to agree with many of the above responses. Combining your assets with your mothers) could lead to unexpected results re qualification for various programs and problems if she should pass before you - regardless of whether or not you have siblings. But, I guess my larger question is why would "you and your mother own this house" - where does your wife stand in all of this? Just wondering?

I was wondering the same thing about the ownership, IR. Maybe the wife had a previous bankruptcy or something?

Thank you guys for the feedback. My wife doesn't mind that my mother would live with house since we will have our own privacy. My wife does have a full time job w/ benefits but she makes about half of what I make so it wouldn't be feasible if it was just the two of us.

I've read all the feedback and there's alot to consider but I still think it's the best option for us for moving out of our apartment and into a house.

I do hope you'll do your due diligence and seek professional counsel on the above questions before proceeding. It just seems smart to do your homework first...

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