Where to put money owed to my in-laws in 7 years

[sisbarn70]

Last year, my in-laws gave us 6% of the purchase price for our house ($35,400) with the understanding that we give them 6% of the sale price when we sell or in 7 years, whichever is first. Our house is now valued at 625k so we owe them $37,500 and this will continue to rise most likely. I think we can save that much next year. Wondering if I should

a) pay them back right away especially because they’re pretty annoying about money

b) put in HYSA for safety and pay back at 7 year mark

c) stick it in an ETF and pay back at 7 year mark

Thanks for any advice! Plan is to buy another house at some point hopefully when rates are lower.

 

[labyrinthedheart]

@sisbarn70 Seems like the agreement was to pay them back when you sell the house. That hasn’t happened yet, so I think you should have a conversation to clarify whether they want to change the agreement.

Once that’s settled, if they want the money when you sell, I recommend putting that money in a HYSA. You need to ensure the money is there whenever it is you need it. Since it could be as early as a few years, it’s too risky for the market.

 

[sisbarn70]

@labyrinthedheart 7 years or at sale whichever is first

 

[rosewood2011]

@sisbarn70 Is it pay them back the $35,400 if you don’t sell? Are you just expecting to save the higher number IN CASE you sell?
If they are annoying about money it seems like you should pay back $5k per year with $5400 the 7th year unless you sell for the 6% being more than the original amount. I would hysa it still through the time, can get a lot. Right now I get 5%+ apy with wealthfront.

 

[elite_jedi]

@sisbarn70 Best bet is to pay them back what you owe now so that they don’t hold it over you. Then look at the value at 7 years and pay them the difference.

NOT owing family money makes holidays so much easier! Especially since you said they are annoying about money!!

 

[jaery56]

@elite_jedi That plan makes it so they would lose about 12k on returns opposed to if they had just waited the 7yrs with the money in a HYSA.

If they have the money they should offer to pay then back right away as long as it's understood that they both are agreeing to waive the seven year portion. So the 6% now is all they'll get and they can't ask for more in the future. If they say no keep it in the HYSA for 7 years and pay it back then.

Family money situations can be annoying but this would at least give the loaning family members a choice to get their money back now without the borrowing family members being taken advantage of

 

[belovved]

@jaery56 I like this suggestion. One other angle is that there's no guarantee that the home will be worth more after 7 years, whereas OP would be offering them an early exit with interest. Seems like a good deal for all parties.