Nice if you can afford to buy your children homes! My 18 year old has the choice. Go to college and live rent free or pay rent. She wants to work and forgo school so she is paying rent. About 1/8th of what an apartment would cost, and I’m putting the cash in a secret savings account for her which she doesn’t know about. But she says she wants to be an adult and do as she pleases. I’m probably being too lenient on her.
Ah but you presented your daughter with a lousy false dilemma. Beat yourself up a bit because all parents make the mistake.
If a parent is willing to let their child to live rent free for college, the 3rd OPTION is the best of the three. Live rent free and save for a house down payment. The rule though is Parents cannot touch any of the money because everybody wants to spend other people’s money, especially on junk. That error makes your child a slave. But the money ONLY goes for down and you crimp until achieved. A drug addict, she fails. Be supportive.
But parents and kids love to spend their kid’s money on stupid stuff like cars or vacations. Those are bad debt. A mortgage down, 20% plus is good debt. Then it is a race against inflation, but a good race.
She wants to experience the false freedom as a renter. Tell her as an owner, it is real adult freedom. Basic algebra skills help, Annual Mort Rate math.
With the house, she can rent to a friend. That is the adult way. And keep your secret money separate, because if she earns 15% and you have 15% down, that is team work. That is love.
She can then rent to that othef FReeper’s (Popman) kids, rent debters.
But save you must UNTIL the monthly home payment is STABLE.
Then she does not need any college debt. A future paid off house she can work anyplace.
Another positive twist is since your child is young, put all her earned money in a small cap fund from any of the few big stock firms.
Small cap = 20 years @ 11%
Large cap = 15 years @ 7.5%
The signed contract is the fund is ONLY for retirement or a house. No other options.
If she marrys a rich guy with a house already it is her retirement. Otherwise it is house down payment.
These assume you have a good trust relationship with your child. But these are the MAXIMUM earning potential. 15 years eg is the safe period, guarenteed money, shy of major nuclear war.
Rich dad or Poor dad.