Additional Financing Options for New Buyers: The Landlord Parent

A current trend lets young adults acquire their first homes through more flexible financing schemes. Parents are now taking on the role of landlords to their adult children-- buying homes their child is interested in, and letting them pay back through low- (or, sometimes, no-) interest, flexible payment schemes.

College graduates used to have the dilemma of paying expensive rent or having difficulty saving up for a down payment for bachelor pads… but not anymore. Parents are purchasing property and renting it out to their children, and letting them pay amounts well-below market value.

What would normally cost as a $2,000/month one-bedroom rental in Upper East Side, New York City for a young professional turned out to be a $1,000/month mortgage deal for him, thanks to his parents who bought the apartment for him to make his living arrangements easier.

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Parent-to-child landlord arrangements do not necessarily require contracts, but some parents opt to formalize their financing arrangements with their children. This arrangement brings advantages to both parties: the parents get to add an asset into their portfolio while hoping that its value will appreciate over time. Adult children, often young professionals in their first jobs, on the other hand, get to live in a better housing option without paying expensive rent. If they do get to pay off the entire property value to their parents, they get to acquire a home well below its market value—a great deal for any home investor.

Isn’t it great to have such supportive parents? To read more about parents becoming landlords, you can refer to the original The New York Times post here. For assistance on financing options for your first home, you can send Cain Realty Group a message or give us a call at (512) 522-4659.