Alright, so first things first before we dive into this topic, I love my kids. I’m actually a big family man and love to spend time with the rest of the Walker clan. However, there comes a time in every family’s journey when it is time for the kids to move out and chart their own course.
Let’s be honest, given the current economic conditions and the consistent rise in property values, it is getting harder and harder for kids to move out and buy their first home. So as a parent, what can you do to help ‘get the kids out’?
Help with their down payment
The most obvious answer is help out with their down payment. Providing your child with a cash gift for their down payment will help them get on the property ladder, and if this is financially viable for you, it’s a good way to help out. However, this option won’t be attainable for everyone — for example, 5 per cent on a $350,000 condo is $17,500. 20 per cent is $70,000.
Cover some of their expenses
Ok, so perhaps you don’t have $15,000+ readily available to help cover your child’s down payment, but can you manage to help with half of their rent for a year or two? Consider this; if they end up paying $2,000 a month in rent, if you help with half of that, that’s $24,000 they’ll have saved over two years. Over time, this type of assistance can become just as valuable as offering a lump sum gift for their down payment.
Co-sign the mortgage
If your child has a down payment saved, but has a challenge around their credit history. You can co-sign on the mortgage to help get it approved. You will be obligated to make payments should they default, so there’s some potential financial responsibility to this, but there are no upfront costs.
Become a landlord
If it is financially realistic, there’s the option of purchasing a home for your child to live in. You will become their landlord and they will pay rent to help cover the mortgage. Perhaps you could build a little extra room into the rent payment, which can be put towards your child purchasing the home from you in the long run.
Teach sound financial management
This is important. We need to do a better job of making sure our kids get sound financial advice and learn about budgeting, banking and how to manage their finances. Educate them from an early age and be open about how things work. Let them know that they can turn to you if they need help or have questions.
In my opinion, real estate is one of the very best ways to make and grow wealth. Smart real estate investing can make a very robust retirement plan. Helping your children get on the property ladder is a very substantial gift, which may help them throughout the course of their entire lives.
If you have any questions about investing in, buying or selling Kelowna real estate, please contact me directly. It would be my pleasure to chat with you. I can be reached at 250-764-4344 or Mark@KelownaProperties.com.
Mark Walker is a real estate agent and the broker/owner of Kelowna’s Walker Real Estate. His company runs the website KelownaProperties.com - Kelowna’s most comprehensive real estate search tool.
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