I think it sounds like a great plan overall, but he may want to tweak it a bit.
I second the recommendation to rent for awhile before buying for a few reasons:
- Not only may he decide he does not like the city he moves to, even if he decides to stay, he may decide to buy in a different part of town than where he originally thought he would. The house we bought after relocating to Austin is in a completely different part of town than the areas we originally targeted. After living here for awhile (renting), we changed our target areas based on traffic patterns and how they meshed with our lifestyle, localized property tax quirks, scenery, general neighborhood "feel," and of course proximity to excellent public golf courses.
- Closing on a mortgage is not guaranteed. Low appraisals have been the snag in this area, and I'm sure it's the same situation in other parts of the country. Doesn't matter how good your relative's credit is (and I'm sure it's top-notch); if the appraisal comes in under the contracted price, the sale is not going to close.
- If he pays cash (rents 'til he reaches 60 if that's the magic number for him and then buy), he may be able to get a better deal on the house. After we bought our house, we found out that the builder had rejected an offer that was 2.8% higher than ours just before ours came in, and the only difference was that we were paying cash.
- As others have said, the "over 3% return" may not be guaranteed unless he ties up his cash for longer than he would like to.
On the notion of working part-time, working when & how much you WANT to feels a heck of a lot different than working full-time because you HAVE to, so the per diem (or some other part-time work) is something he should definitely consider.
I hope everything works out as well for him as it has for us!