OP here. Thanks for all the responses. I guess the answer is borrowing against a paid-off house that they were given - I hadn't thought of that. If I were gifted a paid-off house, I would just be grateful to never have a mortgage; it wouldn't be my first thought to leverage myself back to the gills just to upgrade my standard of living a little bit.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in a neighborhood of 1.5-3 mil homes (think Tulip Hill, Mohican, Glen Echo Heights) and there are quite a number of people living in their parent's houses, paid for long ago, who are sitting on lots and homes with a massive capital gains. Pretty easy to get a HELOC or equity loan for 500-700 and still not approach 80% LTV

My parents live on a lot of land in this area. They want me to do this. Any resources on this? I didn’t realize so many people did it.

You just go to a bank and say you want a home equity line of credit for X dollars with X being less than 80% of your home’s value

My co-worker said him and his wife did that with their in-laws house. Basically, his wife grew up there and they decided to make a in-law suite and revamp the house. So, you're saying that they basically took out a loan to do this? Who's name is on the house? The parents?

The loan is secured by the house so the person whose name is on the deed is the only one who can do this. It’s basically just borrowing against your equity in the house.

How are people doing this if the home is owned by their parents?

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Are sure they only make $160k? That’s very low for a 30+ year old married couple from wealthy families. Are they teachers? I have a feeling their income is a lot higher than you think it is.

Who said their families were wealthy?

Pretty sure the house was not valued at $900k when the parents bought it.

Passing down an almost $1M home means you’re wealthy. Doesn’t matter when the parents bought it.

Not really. Parents likely bought it for $100K 40 years ago and paid off the mortgage over 30 years. And lived there until they couldn't any longer and then passed it onto the kid rather than selling. Those parents may not be "wealthy", just financially savvy and able to stay in one house their entire lives and pay off a mortgage over 30 years.

They may not be wealthy, just financially savvy and patient? It may not be wealthy by your standards of wealth inside the wealthy DMV bubble but to say that’s not “wealthy” is absurd.

I don’t understand why DCUM struggles to call people wealthy.

Buying a home for $100K and paying it off after living in it for 30 years is NOT wealthy. It does NOT matter what the home is worth now. They bought a middle class home and lived there for 30+ years. That does not make them wealthy.

My own LMC parents did something similar... paid $80K for a home and sold it 35 years later for $320K, and only had a $25K mortgage at that point. Trust me, they are NOT wealthy. Never made more than $35-40K yearly over their lifetime. They just lived frugally, stayed in the same home and saved whatever they could. But they are NOT wealthy. Even with the home sale, they were only worth $800K at that point with all their "savings". That is likely a middle class family who worked to pay off their mortgage, not keep up with the Joneses(ie did not upgrade to a fancier home along the way), and just got lucky that the home increased a ton during those 30-40 years. But that fact alone does not make them wealthy, as they did not purchase the 900K home---they paid maybe $100K 30-40 years ago.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in a neighborhood of 1.5-3 mil homes (think Tulip Hill, Mohican, Glen Echo Heights) and there are quite a number of people living in their parent's houses, paid for long ago, who are sitting on lots and homes with a massive capital gains. Pretty easy to get a HELOC or equity loan for 500-700 and still not approach 80% LTV

My parents live on a lot of land in this area. They want me to do this. Any resources on this? I didn’t realize so many people did it.

You just go to a bank and say you want a home equity line of credit for X dollars with X being less than 80% of your home’s value

My co-worker said him and his wife did that with their in-laws house. Basically, his wife grew up there and they decided to make a in-law suite and revamp the house. So, you're saying that they basically took out a loan to do this? Who's name is on the house? The parents?

The loan is secured by the house so the person whose name is on the deed is the only one who can do this. It’s basically just borrowing against your equity in the house.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in a neighborhood of 1.5-3 mil homes (think Tulip Hill, Mohican, Glen Echo Heights) and there are quite a number of people living in their parent's houses, paid for long ago, who are sitting on lots and homes with a massive capital gains. Pretty easy to get a HELOC or equity loan for 500-700 and still not approach 80% LTV

My parents live on a lot of land in this area. They want me to do this. Any resources on this? I didn’t realize so many people did it.

You just go to a bank and say you want a home equity line of credit for X dollars with X being less than 80% of your home’s value

My co-worker said him and his wife did that with their in-laws house. Basically, his wife grew up there and they decided to make a in-law suite and revamp the house. So, you're saying that they basically took out a loan to do this? Who's name is on the house? The parents?

The only thing you should be concerned about is that it will hopefully bring up the value of the neighborhood and then your house. Otherwise not sure why you care?

You are more than likely completely off on their salaries. Most people on DCUM believe no one makes any money except big law and CS majors.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Are sure they only make $160k? That’s very low for a 30+ year old married couple from wealthy families. Are they teachers? I have a feeling their income is a lot higher than you think it is.

Who said their families were wealthy?

Pretty sure the house was not valued at $900k when the parents bought it.

Passing down an almost $1M home means you’re wealthy. Doesn’t matter when the parents bought it.

Not really. Parents likely bought it for $100K 40 years ago and paid off the mortgage over 30 years. And lived there until they couldn't any longer and then passed it onto the kid rather than selling. Those parents may not be "wealthy", just financially savvy and able to stay in one house their entire lives and pay off a mortgage over 30 years.

They may not be wealthy, just financially savvy and patient? It may not be wealthy by your standards of wealth inside the wealthy DMV bubble but to say that’s not “wealthy” is absurd.

I don’t understand why DCUM struggles to call people wealthy.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Are sure they only make $160k? That’s very low for a 30+ year old married couple from wealthy families. Are they teachers? I have a feeling their income is a lot higher than you think it is.

Who said their families were wealthy?

Pretty sure the house was not valued at $900k when the parents bought it.

Passing down an almost $1M home means you’re wealthy. Doesn’t matter when the parents bought it.

Not really. Parents likely bought it for $100K 40 years ago and paid off the mortgage over 30 years. And lived there until they couldn't any longer and then passed it onto the kid rather than selling. Those parents may not be "wealthy", just financially savvy and able to stay in one house their entire lives and pay off a mortgage over 30 years.

OP: "I don’t understand how my neighbors are paying for their renovation"

And you don't have to!

Anonymous wrote:

Anonymous wrote:I think questions like this are fair. We all want things we can't afford so when we see someone who appears to be doing something very expensive compared to what they appear to earn it kind of begs the question "what am I doing wrong that I can't afford the same or similar thing."

But to your question OP, I'd imagine the key is a gifted house and the only thing they're paying for is the renovation. Even if the house isn't gifted entirely, whatever they paid is likely much below market rate, or they're paying their parents directly and that is a whole lot easier than paying a bank who could take the house if you miss a payment.

+1

Also, a gifted or deeply discounted family house is “family help.” So is cash to purchase stock at a young age. Or a down payment on a condo that can be sold later. The people who insist these things don’t matter tend to be the ones who benefit from them; the downside of that is being completely out of touch with the reality of most other people. It’s great to accept family help, if you have it offered - just own that.

“So is cash to purchase stock at a young age.”

Huh? You can open a brokerage account with no money. Start small buying stock in small increments or invest in index funds with very little money. Reinvest dividends. Wash, rinse, repeat. You can literally start with less than $50/month and increase as your income increases. Instead of buying expensive coffee at Starbucks, put the money you would have spent in the market. Let time and compounding work its magic.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Are sure they only make $160k? That’s very low for a 30+ year old married couple from wealthy families. Are they teachers? I have a feeling their income is a lot higher than you think it is.

Who said their families were wealthy?

Pretty sure the house was not valued at $900k when the parents bought it.

Passing down an almost $1M home means you’re wealthy. Doesn’t matter when the parents bought it.

Owning a home valued at $1M is not wealth. Dime a dozen in the DMV.

Owning a Ferrari valued at $350k is not wealth. Dime a dozen in Dubai.

Agree.

Anonymous wrote:Inheritance
Legal Settlement
Lucky investment
Higher salaries than you think
Lottery winnings
Genie
Fraud

Why does an investment have to be “lucky”? Invest early and often. Start small and build.

"The stock market is a device which transfers money from the impatient to the patient." - Warren Buffett

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Are sure they only make $160k? That’s very low for a 30+ year old married couple from wealthy families. Are they teachers? I have a feeling their income is a lot higher than you think it is.

Who said their families were wealthy?

Pretty sure the house was not valued at $900k when the parents bought it.

Passing down an almost $1M home means you’re wealthy. Doesn’t matter when the parents bought it.

Owning a home valued at $1M is not wealth. Dime a dozen in the DMV.

Owning a Ferrari valued at $350k is not wealth. Dime a dozen in Dubai.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Are sure they only make $160k? That’s very low for a 30+ year old married couple from wealthy families. Are they teachers? I have a feeling their income is a lot higher than you think it is.

Who said their families were wealthy?

Pretty sure the house was not valued at $900k when the parents bought it.

Passing down an almost $1M home means you’re wealthy. Doesn’t matter when the parents bought it.

Owning a home valued at $1M is not wealth. Dime a dozen in the DMV.