I was pouring myself a pre-dinner drink when my wife casually asked, “Can you get me a lease-to-purchase contract?” I’m proud of myself for keeping a steady hand and not splashing the bourbon—while my happy little skiff pitched violently in another of those squalls that suddenly appear on my life’s ocean when my wife starts a conversation like this. “What type of lease to purchase?” I asked, waiting for the deck-clearing wave. “A lease to purchase a house,” she said. Me: “We already own a house.” Her, exasperated: “The contract isn’t for us. It’s for Lupe.” Lupe is our nanny. “Can’t Lupe just get one from her broker? Why does this involve us?” “Because,” she said slowly, as if talking to an imbecile, “we’re buying Lupe a house, and we need to set up a payment plan so she can pay us back.” Splash!
When we were newly married and childless, I marveled at the lengths to which our friends with children would go to keep their nannies happy. Loans were a frequent feature. Medical expenses were paid. Bail made for a wayward brother. One couple, to my utter astonishment, bought their nanny an SUV to ensure that their children were carted around in relative safety. But a house?
“Don’t look so stricken,” she said, eyeing the bourbon soaking my shirt. “We’re only talking $75,000.” Oh. Truthfully—and I did my best to conceal it—I could have cried in relief. I had no idea what houses for nannies were going for these days, and I was terrified that I would be shelling out three or four hundred grand. This, although painful, was manageable.
My wife and Lupe spent the next week talking with brokers and inspectors as they compared the pros and cons of the surprising number of houses in the $75K range. Foreclosures bring heartache to some, but opportunity to others. My only involvement consisted of a testy exchange with an officer of the bank that owned the house who wanted proof that I could pay the purchase price at closing. I’ve never been so insulted in my life. I told him I would be putting it on my Amex Black card.
Lupe, I should note, is an angel. God’s vicaress on earth. Really. Our children adore her. Me, I’ve had fewer than 10 minutes of total talk-time with her in the four years she has worked for us, but that’s mainly because I don’t speak Spanish.
Anyway, I started thinking about how we would structure the deal with Lupe. When we were out to dinner, I bounced some ideas off my wife. “We don’t want to be usurious,” I said. “I’m thinking maybe 10 or 11 percent interest.” She looked up sharply from her menu. “We’re charging 7 percent,” she said. Seven percent? I was knocked off my game. “Wait a minute,” I stuttered, “Triple-A rated munis are paying more than 7 percent on a tax-adjusted basis. I’m not going to sell a guaranteed-return bond to buy a house for someone paying 29 percent on her credit cards.” “Take it out of the hedge fund,” my wife answered. Take it out of the hedge fund? I was speechless. “Are you crazy? Last year we earned 38 percent net after fees. I’m going to call up Phil and have him send us $75,000 so we can buy our nanny a house?” “Phil doesn’t take care of your children!” she snapped.
I sat there open-mouthed, goggling at the other guests. This conversation had careened so unexpectedly off track that I didn’t know how to proceed. Getting past the I-have-to-buy-my-nanny-a-house hurdle was one thing. Wrecking one’s carefully calibrated risk-weighted asset allocation strategy was a whole ’nother thing. I had to get her back on my side. “Okay, 7 percent,” I said. “But we have to have a plan if Lupe wants to sell the house before it’s paid off.” I returned to my prepared script. “I figured that if she sells in the first five years, we keep all the profit. If she sells within, say, five to 10 years, we split the profit with her 50-50. And if—” My wife cut me off: “If the house goes up in value, then Lupe will get the profit. Why should she be denied the American dream?”
Forget that Lupe is not even American, forget that I would be buying a house for a person whose last name I didn’t even know, a house that I would never even look up on Google Street View, much less actually visit—we’re talking 75 grand tied up for 30 years earning 7 percent. If there’s no default. All risk, with no upside! This was a dagger in my heart.
My wife stared me back down into my menu. All I can say is, my kids had better turn out perfect.
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