Moving out of your parents’ house.
Leaving the nest.
For most of us, it was a rite of passage. We went to college and then proudly headed out into the world to make our own way, while our parents turned our old room into another guest bedroom.
However, for a significant percentage of young adults, that rite of passage is now all about returning to the roost rather than flying solo. According to Gallup research, 14% of millennials, the age group of 24- to 34-year-olds, have moved back in with their parents. The homeownership rate for those under age 35 was 36.2% in the first quarter of 2014, down from a historical high of 43.1% at the end of 2005, according to U.S. Census Bureau data. According to numerous economic reports on millennials, this is attributed to a weak job market, high cost of living, significant college debt, and other factors.
These kids, as well as any adult children who have decided to move back in with Mom and Pop, are lovingly referred to as “boomerang kids.” The analogy is obvious.
For Mom and Dad, who would love to have the kids across the hall become the kids across town, here are seven pointers you might want to consider:
1. Start charging rent
Cut off the free ride. Yes, it sounds harsh, but you may be doing both you and your kid a favor. Managing money and a monthly budget is something that is not learned in school, and it is certainly not learned hanging out in your parents’ converted attic for free. Give your boomerang kids a real estate reality check. If the free ride comes to a screeching halt and they are paying rent, they will probably want to do it in their own apartment, closer to (or with) their friends, near downtown or a closer drive to their office. Charge rent and enforce it. Once they start getting that first-of-the-month monetary wake-up call, it might shock their system enough to have them consider alternative arrangements. If they’re going to have a landlord no matter what, they’re likely to consider a new, more independent situation.
2. Collect monthly payments
Here’s another way to give them a foot out the door — but still a leg up. Start charging them monthly payments now. Let them know that they will have to come up with the monthly equivalent of local rents each month for the next six months. At the end of the six months, when they move out, you will give them back all the money. That does three things: You teach them budgeting skills, you incentivize them to move, and you give them a financial helping hand on move-out day.
3. Be a strict landlord
No parties, no loud music, no guests after 10 p.m. Keep the house rules strict. At some point, your kid is going to want to have a little independence, and some fun too. Living with a strict landlord may be just the incentive he or she needs to find a place of their own.
4. Set a deadline … and stick to it
If you can sense that your boomerang kid is riding out his or her free meal ticket under your roof as long as they can, help them visualize when that ride will end. Create a deadline for them to move out and stick to it, no matter what. It’s likely you never intended to have kids under your roof for more than two decades, so your children need to respect that … and they need to get on with their own lives. Even in a world where millennials are underemployed compared with their Gen X, Y, and Baby Boomer counterparts, there are still plenty of ways for them to make a living that enables them to live with a roommate or two or three … elsewhere.
5. Help them get organized and overcome the mental hurdle
After all the financial aspects are considered, one of the biggest hurdles to making a big move is mental: It just feels overwhelming. So many things to do, buy, and organize before it can actually happen. Your child may just need the expertise of someone who’s moved multiple times in their lives to talk them down off the “I’m too overwhelmed and can’t do this” ledge. Map out all the necessities and then make a list of the “nice to haves down the road” so they can see what’s an immediate need, and what can be done over the coming weeks and months.
6. Gift or loan them the down payment
Trulia’s latest survey showed that 50% of millennials surveyed plan to go to their parents for help with the hefty down payment required to purchase a home in today’s housing market. If you want your adult child up and out of your basement, consider giving them the financial head start now they need to form their own household and be independent.
7. Buy a multiunit investment property
I am a huge proponent of purchasing multiunit properties like a duplex, triplex, or fourplex, because they are great investments. In the case of your “failure to launch” millennial, slot them into one of the units of your new property and rent out the other unit(s). The rental income is likely to cover much of the costs of ownership, and you’ll have a built-in property manager in the building to keep an eye on things. Plus, your boomerang kid is learning valuable management skills at the same time. It can be an investment property for you and simultaneously solve the “son or daughter is still in my basement” problem.