Hey all,
Just graduated college and paid off all my student loans (got a scholarship that covered a significant part). I am starting my full time in NY soon. My parents live in LA (no house, been renting this whole time and little-to-no savings). I was wondering if it is possible to start buying a home for them? I am frugal with my personal spending so I think it doable. My parents will help as well so I am not eating the total cost. What are your thoughts?
Thanks!
I do a lot for my parents. So I respect this gesture, even in thought.
But, I think it is a bad idea for this time in your life. First of all, you're going to have to do the research to make sure you make a reasonable investment. Then, you have maintenance costs on the house and things break. You may have to cover some of these costs as it is your investment.
Not only that, but if for some reason you can't keep up with the mortgage, you may have to rent out the place or sell it at a bad time in the market. You're also putting the relationship with your parents at risk. If you have to get them out of the place, its going to be very sour.
1st year analysts in NYC don't have significant wiggle room in their financials. I mean if you get paid extremely well, you get the luxury of your own studio or 1BR. If not, you have roommates. NYC cost of living adds up extremely fast and it seems like it might suffocate you gradually (the decreasing flexibility in your personal cash flows), increasing the amount of stress in your life. You don't want that.
Unless you're making payments on a doublewide trailer. Any reasonable place in LA is going to dent your wallet significantly as a first year analyst. People that make it big in sports with 8 figure contracts 'buy mom a house', which is cool and all, because they have money to blow. I think you should give yourself much freedom in your financials and be careful about being tied down to large investments so early in your career.
If they need help, throw them some $$$. Pay for the cable or electric bill. Cover their rent for Christmas. There are a lot of things you can do without being liable for a few hundred grand in real estate right after you just paid off your student loans. How would you even buy this house? Do you have enough cash to put down for the purchase? I can't imagine the financials of this coming together.
Maybe later in your career when you are a bit more stable, you could do this with relative ease. Get a nice place for them where they can retire and you can visit. But, give yourself a margin of safety in life. Its important.
I really appreciate this! As you can probably tell, I am young and I am trying to figure out a plan, or attempt to create one. My thought process was to save up my bonus as much as I can for the next couple of years, which then could be my down payment. Besides that, I have more research to do.
When do you think it would be the best move for this? Any advice in terms buying a home would be awesome!
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