Sell or hold on

[nambome1]

Advice needed please. Im a Mum with husband and 4 young adults. Our current house is too small to house them all. Current mortgage on family home is 230k.

We decided we would buy another house so the kids could live there, pay $150 each per week and we could negative gear the property. The new house cost $800k. This would help them out to save for their own house, and in 5 years we would sell our current home (currently worth 1.1k) kuck the kids out and move into the new home. Leaving us with no mortgage and the kids set to buy their own home.

BUT...as life would have it a curve ball has been thrown in. Last night son 1 said he was breaking up with his girlfriend (so we are now losing $150 p/w). Then son 3 told us that he's struggling with his finances atm, so he too may be unreliable in paying his share.

My question is, what would be better long term (5 years) for me financially.

Should l;
A: rent the new house out at $600 p/w. Negative gear it then sell it in 5 years.

B: Sell my current home now at 1.1k, move into the new house with no mortgage.

C: Let my kids who can afford it rent it and then rent out the extra rooms.

D: Another suggestion.

We love the new house and want to retire there. So we are happy with the new purchaee, just not sure which path would be the best financially long term.

 

[resjudicata]

@nambome1 Having kids to pay the mortgage is a new trend so it seems

 

[nambome1]

@resjudicata We definitely are not benefiting from it. We will be working our asses off in making repayments in order to give them a chance to purchase their own home. They can either pay $300 per week to live elsewhere, or pay $150 per week to live in a house we purchased for them.

 

[maddiealex8]

@nambome1 Hey can I buy your home for 1.1k?

 

[resjudicata]

@maddiealex8 I'll offer 1.12k

 

[stephieangel]

@resjudicata Low ballers I’m coming in at 1.3k at least

 

[jwarner21]

@stephieangel Just gonna do a shut down all competitors bid of 1.8k

 

[resjudicata]

@jwarner21 Yolo I'm 1.801k

 

[jwarner21]

@resjudicata 5 dollar increments at least please!!

 

[cadi]

@nambome1 Just be aware rents need to be market rates if going down the claiming losses on tax. The ATO are onto cheap rent for family members.

Best not to panic sell imo. Id be inclined to (C) rent out the empty rooms and see how that goes, but be wary of tax claims.

 

[rimmel2]

@cadi Agree. It will be really complicated tax wise if direct family members are renting from you.

If the new house is big enough for everyone, then I would be inclined toward option b and you all move in together into the big house. You can then reassess your wealth generation plans to assist your kids into their own homes when it comes time for them to leave.

e.g. in 10 years there might be significant equity in the new house. Could use that to help your kids or invest in ETFs or whatever.

 

[nambome1]

@cadi Yes, aware of this. Thanks for your advise though.

 

[moonwalker_03]

@nambome1 What do you mean by “kids who can afford it”? You have said in the comments you aren’t profiting and are paying the repayments. If they can’t afford $150, they can’t afford to rent privately so what? They stay in the family home? Why? If you’re paying both mortgages anyway and you don’t want them there, you may as well be giving them the whatever-they-can-afford-rate to gtfo of your house. But I find it hard to believe they can’t afford $150 a week unless they’re unemployed.

My suggestion? If you don’t need the space, sell the 1.1mil house and downsize to a nice unit/townhouse/small home for 800k or less, so you’re only paying one mortgage (on the kids play house) minus whatever they’re able to contribute and keep a spreadsheet of their shortfalls and just tell them they’ll have to make it up when they earn enough so it’s fair to their siblings.

 

[nambome1]

@moonwalker_03 My kids currently dont live with us, they rent. They are all hard workers and great humans, hence why we'd like to help them out. They certainly are not free loaders and never asked us to do this.

The child that is struggling a bit is 18 and a 1st year apprentice. He's still young but an amazing worker. The other kids are fine financially, as mentioned.

Of course they can afford $150 per week, they currently pay $300 per week at their own rentals.

The plan was that they pay rent of $150 and put at least that ($150) or more into a high interest saving account. So in 5 years they have a nice deposit saved up for their new digs.

 

[moonwalker_03]

@nambome1 This all seems honestly pretty weird. If they’re all independent, leave them alone, focus on your own finances, and hand them the 40k plus interest they’d accumulate saving 150pw for 5 years when they’re ready to buy. At 600pw plus increases, you’d be receiving near 30k per year in investment income, so like someone else said, move into the house you prefer and rent the 1.1mil one for whatever it’s worth (or sell it and reserve 40k in a HISA for each kid).

 

[nambome1]

@moonwalker_03 This was the advise l was looking for, albeit a bit rude. I wanted to know the different options in keeping a second home as a rental or not. What the best way is to help my kids out as lm in a position to do it. I actually think reddit isnt the place to ask serious questions because half the responses are rude or unhelpful.

 

[moonwalker_03]

@nambome1 Eh, it’s communication. You put forward a story that sounded like the adult kids were in your current house and contradictory info with the can’t afford $150. If you communicate more logically and clearly, you will get the same out of responses. If you want non-judgmental responses, talk to ChatGPT or Copilot.