Buying a Home with Your Parents in California

Buying a Home with your parents in California

Owning property with family members can be an excellent way to live and invest. For Americans, this method of homeownership offers some major benefits, which we are going to list in a moment. 

This is California. It’s quite a competitive market, coupled with the fact that buying a home with parents is not the norm and presents fresh challenges (with the benefits).

In this article, we won’t be telling you that buying a home with your parents is the best choice for you - though it might be. We’ll explain how it works, then give you the facts about buying homes with parents, plus any risks, because you deserve to be informed. 

The Benefits of Buying a Home with Parents

With the mutual goal of owning a home, you and your family will have some benefits that normal homebuyers don’t. 

San Francisco Home

A San Francisco home - via Dale Cruse

Credit History: Even if your credit history is spotless, parents often have a more attractive history from a lender’s perspective.

Shared Duties: Homes need upkeep and maintenance to stay in great shape. It’s not always hands-on either. Besides mowing lawns, washing outdoor furniture, and filling bird feeders, sometimes contractors or tradesmen need to be called. 

Tax Benefits: Realtors often help buyers choose homes with parents, who then may become eligible for tax benefits. Buying a home with parents to use as a vacation home is one way to deduct taxes of up to $1,000,000.

Pooled Finances: Every family is different, but parents often have more access to finances than their sons or daughters. How your family decides to use them is up to you, but your budget may be larger as one family unit. This could mean a larger property, better features, or a better location for everyone.

Aging Comfortably: Certain members of your family may prefer the independence and security of living at home. Retirement homes or senior living facilities are not always necessary and can be extremely costly. 

Health Benefits: You may not know that living together as a family unit positively affects your mood, but also, a slew of other ailments. Healthy people who live in a two-generation household had a 10% lower risk of premature mortality, according to an NCBI report.  

Childcare and Support: If your family has younger children, you’ll have more flexibility and access to babysitters (as long as they’re willing). It could also strengthen familial bonds. Whether for a few minutes or regularly during the day, this could save Californian families a ton of money each year. For them, the average cost of childcare is usually around half as much as the median rent, which is a significant amount.

  • In San Francisco, preschooler child care averages $1,471 per month, while infant care costs $1,926.
  • In San Jose, preschooler child care averages $1,276 per month, while infant care costs $1,729.
  • In Los Angeles, preschooler childcare averages $1,000 per month, while infant care costs $1,406.

Disadvantages of Buying a Home with Parents 

The advantages probably outweigh the drawbacks, but you should still know about each one.

Reduced Privacy: If you’re buying a home with parents in California, you’ll have to change your perspective on personal privacy. Different generations can co-inhabit spaces, but separate living spaces can be a big help. This is not an effort to avoid your family, but to preserve the independence you desire.

Responsibilities: Both generations, young and old, will need to add some responsibilities to get the benefits from this arrangement. Every family will have different things they need. For example, the older generation may request quiet in the evenings, which requires changes from the younger generation. Pet care and child care could become shared responsibilities too. 

Unexpected Costs: The financial responsibilities may be shared at first, but what happens if one party suddenly can’t afford them? Medical expenses, which tend to catch us off guard, could be overwhelming. In that case, you might find that one party has to cover the mortgage of the other.

Tips for Buying Homes with Parents

Navigating the homebuying process is complicated enough, but having family members there can be a curveball.

  • Create a plan for living together: Will you use the same entrance? Will there be shared spaces? Questions like these can set much-needed boundaries that everyone involved will benefit from. 
  • Clearly discuss the financial aspects: With your family, you can structure the home buying in a few different ways. Joint mortgages can be a fantastic way to invest and co-own the property. Some families choose to buy the property and let the younger generation pay rent on the home. Whatever you choose, discuss it with your family and a realtor. 
  • Expect the unexpected and plan for it: It's not paranoia to plan ahead, even for situations that may not happen. Sickness and loss of employment can be planned for, and should be, even if they are unlikely. It’s always better to look at these possibilities ahead of time.
  • Treat this purchase like a business decision: You’re family, but that still doesn’t mean that anyone should be unprotected. The same goes for the other signing party; there’s no reason that buying a home with parents can’t be convenient and protected by a solid legal agreement.

Father and Daughter discussing about buying a home in CA

Discuss and plan with your family - via Kona Gallagher

Take the Next Steps with Us

Multi-generational ownership in California relies on strong planning and then, the process of buying begins.

We have the network, experience, and homes to make this a success. Need Californian attorneys or accountants? We’ll connect you with the best ones we know, with long track records like ours.

More Questions? Follow-up With Us!

If you have more questions about what to expect from the markets around the Bay Area, don’t be afraid to reach out to us today. Our experts are experienced in all property types and the entire San Francisco Bay Area, and we can help you to find what you need to know today.

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