I suppose I was thinking of something in the $10-20K range and hadn’t thought about actually buying a house for my kid and their spouse or giving like $100K. Yeah, that would be a whole different ball of wax.
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Then again, rentals ask 80x rent as income. So college student need a 1/4 million of income to share a tiny 3 bedroom apartment at 3K/month.
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Where are they finding a three bedroom for $3K/month?
I think the multiplier for the tenants is 40X but it would be 80X for the guarantor, if the tenants could not meet the 40X on their own.
My father had to sign as a guarantor on my first Manhattan apt, even though I had rented in Boston for a couple of years w/o a guarantor.
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You are right, it was 80x for me the guarantor.
The apartments were on the UWS, between Amsterdam and CPW. It was a lucky side effect of Covid rental price dip for the 2 consecutive years while they were renting privately.
I assume it is 3k for the whole apartment, not 3k each. If they are all on the lease then each person would need to have a salary of $50k.
D1 shared a converted 2 bedroom (turned living-room into a bedroom) for 3k down at Union square. They each made 75k base as a bank analyst.
That is a steal! I rented a 2BR, shared by three, for $1960/month in the late 80’s on a CPW/Columbus block. It was an amazing duplex with a sliding glass door out onto the roof, and probably would have cost more were it not for rent stabilization. Rent increases were 6%/year back then.
Those are pretty much customized to student housing. You could tell they had taken a few apartments per floor and further divided/forced them into MANY student apartments - with the weirdest layouts, tiny bed rooms and a tiny kitchen/living area. Very common in that neighborhood. Daughter loved it though - they were all friends and it was “cozy”.
And, yes, fortunately, she finished senior year before a 50% (!) rent increase was asked to renew the lease!
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Anything for one’s own room! Not surprised by the 50% increase, but lucky for her that she was out of there before the increase was implemented.
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When my kid first rented in L.A. in 2018 he shared a 2 BR/2BA apartment with a co-worker. Their rent was $3,050 per month, and they each made $90k. Thus, together they easily met the rent to income requirement of 40X, but they would have had to each meet it individually for the property company/landlord to not have required a guarantor. So, dh and I were the guarantors.
The first time one of my kids was eligible for renting without a guarantor (in an expensive city, in a public service job) I knew before asking that the apartment would be an absolute dump! And I was not surprised when it was.
Great neighborhood filled with expensive buildings- the last un-gentrified building on the block.
My kids live in high COL areas. I wouldn’t suggest buying a house now, but we will help ShawD when she wants to buy a house – she is very mature and wants to do so. She has a decent income and is quite responsible but will need help on the downpayment. We will be happy to do so. We will sit down with the financial planner to figure out what to give. I would expect her to responsibly take care of the house and pay mortgage and all other expenses. And I’m sure she would have and meet those expectations.
ShawSon is newly married. His wife has a terrific job in tech and he is a venture-backed Silicon Valley tech startup co-founder. Given this, he may not need our help. If he did, I might suggest he repay when he could as I think his and DIL’s joint net worth is likely exceed ours in the not too distant future.
@blossom, I don’t think we have had to be a guarantor for either of our kids (except when ShawD was in college, we bought a condo rather than pay for rent in an apartment). I guess incomes were high enough when they got apartments – and ShawD was in a much lower COL area for her first job.
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Older s just sold his first house and bought a “new” (not new but new to them) house in this scary, wonky Nor Cal market. Younger s and family still rent a 2 br condo. They may move, but still don’t want to buy.
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My experience was in reverse. My wife and I got married 1 year after college. We were able to buy a small townhome. But instead of getting help my in-laws continued to make my wife pay them back for college. Then two years later they bought a new house almost twice the size of their current home. I hated writing that check each month.
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My son and his wife close on a house next week in DC. May or may not be the best time to buy but they were ready and tired of renting.
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DS and his wife looking to do the same–northern Va suburbs, so same area. The AFR goes up quite a bit come Dec 1, so it’s down to the wire in terms of getting a loan from family.
What’s the consensus–will the AFR go up again in January?
The AFR rates confuse me. I’m never sure which table applies to which type of loan.
I’m not interested in buying my kid a house - but I am interested in loaning him money for grad school. So there is no property involved. I can’t figure out which table I am supposed to use!
I think the rate is based on the term of the loan–long-term, at least 10 years, is the lowest rate, for example.
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It is, but there are three different charts. Maybe four?
Not the place to ask - I don’t want to derail the thread
I’m thinking that maybe I’d lean more on giving a down payment as opposed to outright buying them the house, to answer your original question. The reality is, would I want to be involved in what exact house for them to get, plus the price? But if giving money towards the down payment leads them to buying a pricier home with high property taxes, maybe that wouldn’t be much of a favor.
It’s a tough call. Perhaps if it was a house in a very inexpensive area, I’d outright buy the house for them. Unfortunately my kids are in SF and NYC, and I’m not willing to dish out millions. I bought my first house at age 23, single, second Lt in the Air Force for 56K. That world where young, low paid single adults can buy a house are long gone, sadly.
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There is a slight difference depending on whether you’re being repaid monthly, quarterly, semiannually, or annually. I did annually for SIL’s med school loan refinancing, but monthly for DS.
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