Should i take money from my parents (which are well off) to invest in a second home if my wife dosent want to?

Question

I am 37 years old ,married and between my wife and i we make good money. My parents are very well off and want to give us money to invest in a second house that we can rent out. They dont "need the money." My wife on the other end dosent want to take the money. She thinks we shood re-finance our home and take money out to buy a second home and start over again. My parents WANT to help us out and my wife dosent want the money but I dont want to start all over again. Do you think my wife should understand the great relationship i have with my parents and accept thier money or re-finance?????

Answer 1

for the life of me I cant understand why your wife doesnt want the help. but i have a feeling if you take the money from your parents she may think less of you for it. so whats more important? your wifes image of you or your parents money?

Answer 2

Let's say I were in your shoes.

My relationship with my spouse is most important to me. What I would do is do what she says, refinance your house and put that money to work.

I would explain this to my parents, assuring them that if we need money in the future, I will come to them. In the meantime, I will show them a plan where we can use that money, get a rental property as my parents planned, but it will be in their name and I will manage it for them.

This way, I get to do both.

Good luck!

- Jim http://jsforex.blogspot.com

Answer 3

Don't look a gift horse in the mouth.

Here is the solution - do both.

Answer 4

Too often when you own people a lot of money they feel that gives them a right to dictate things about your life, how you spend, how you live.

That is likely the risk that your wife is fearing. She doesn't want to feel the obligation.

They say it is a bad idea to put your home at risk for investment. If you lose the investment you can lose your home. A terrible result over just losing some money.

BUT be aware that borrowing 100% of the home price, borrowing the downpayment, it is VERY difficult to get enough rent to cover the payments so you will be in a negative cash flow position, supporting the home purchase with extra funds.

Plus you have maintenace, repair, and taxes. Also rentals are not tax deductable off your income in the same way. You will months without renters where you will have to come up with the payments out of pocket. And I have seen bad renters do lots of damage.

One way to cut costs is to do all the work yourself. You have to LIKE to paint, clean, landscape, deal with renters, and repair. It is in NO way a passive investment.

Over time, with inflation, rents will go up and the cash flow improves, you start to make a profit.  

But starting out it will cost you and cost you significantly out of pocket at 100% loan to value.

Some people buy homes and rent them with the idea of selling the home when prices improve. That is about flipping homes and less about being a landlord.  

You will want to run all the numbers. Do all the figures. Decide if that is the business you want to be in.

My suggestion is to start the process by applying for the HELOC and see the rates and costs or if you can even get the amount you need against your house.  Then compare to the interest rate your parents want.

Then make a deal with your wife that if the relationship with the parents becomes a problem you can promise THEN to borrow the money and pay them off and eliminate the problem.

My biggest concern is that sounds like you should have more money behind you before investing in to becoming a landlord if you have to borrow the downpayment.

Good Luck.

Answer 5

This is a family relations problem more than an investing issue.  You'll have to work it out.