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In today’s economy, home ownership is far out of reach for many people. Here’s the story of a father who wanted to lend his daughter money for a down payment. However, despite the generous offer, she demanded more.
The original poster (OP), a father, whom we’ll call Josiah, wanted to help his kids achieve their dream of owning a house, but according to his daughter, he went about it wrong.
You should know that Josiah claims he is not rich, even though he makes over $200,000 annually. He is an honest man who works hard to make ends meet.
Josiah’s kids are done with school and are doing fine for themselves, with one exception. They want to buy houses, but it has been a crazy process, even with all the government programs that are supposed to help.
So, they did what every child would and came to Josiah for help. They explained that if they could have 25% of the purchase price, they could save on fees and get better rates. Well, Josiah is comfortable enough to blow off random pleasures. But things went differently than one would expect.
Dad wanted to help, of course. They were his children, after all. He was willing to give them the money they needed, but there was a price to pay.
He did some thinking and came up with a brilliant idea. He would help them with the money if they would give him equity in the purchase. Let me break it down; he would provide them with the money if he gets 1/4 of the amount they sold it for when they sold the house.
So, if his daughter bought a house for $800,000 and he gave her $200,000, he would then own 1/4 of the house. If she sells the house for $1,000,000, he would get $250,000. See? 1/4 of the equity.
So, the money he wanted to lend to his children was more of an investment and less of a loan. It doesn’t sound bad when you think of it.
An Offer You Can’t Refuse
His son thought the offer was superb and grabbed it with both hands. He took the offer and got himself a good house. With the programs to help, the money from his dad, and his and his partner’s savings, they got a place with almost a 50% down payment.
On the other hand, his daughter was on the other side of the fence. She thought the offer ridiculous, and her dad was the worst for not gifting her $200,000 — his yearly income.
She figured he could at least give her an interest-free loan if he couldn’t gift her the amount. She said she would rather buy a condo than take his deal. She sounds a little entitled, but let’s see what others think.
A Loan Or An Investment?
Many people have expressed different opinions, but let’s begin with one. Josiah is looking for an investment but is disguising it as a loan. One person is appalled that he would want to invest in real estate through his kids instead of only considering it a loan.
If he can afford his hobbies, he can afford to help his kids out, even though it is his money. Another also mentions that Josiah trying to “invest” that way is illegal, and his kids can report him for bank fraud if he tries to collect the equity.
A Brilliant Deal
Some people believe his daughter is the unreasonable one; she doesn’t have to pay him a dime if she doesn’t sell the house. His son saw this and took the opportunity. It is free money until you choose to sell.
Some comments agree Josiah is on the right path and is even generous to his daughter. Plus, it is a deal. She can choose to take it or leave it.
Living in Denial
Other comments addressed the statement Josiah made about not being rich. They argued he was rich or at least “very high middle class,” but he seemed to live in denial. Who knew that was a thing? Remember that he earns around $200,000/year and can afford more than an average lifestyle. So why not just help his kids out?
Not the Villain
Another set of people thinks Josiah only asks for the same proportion he put in, which doesn’t make him the villain. Remember that if there is a loss, he gets hit too.
Were you waiting for this? Because I was. It is not her money, after all. Someone opines that the money belongs to her dad doesn’t automatically mean it is hers. And no, it doesn’t matter how much he makes.
Your parents must take care of you, agreed. But not when you are doing alright and can fend for yourself. His kids didn’t need the money. It was to help them get started on the down payment.
His daughter mentioned she was going to buy a condo. That means she can get the house herself; it would only take longer. So, what is all the fuss about?
Take Care of Your Parents Instead
Josiah did the best he could. That the deal was the same for everyone and his son took it and is happier for it speaks volumes. If there’s a villain in this story, I don’t think it’s him. What do you think?
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