I think this is a good solution, but I want to add a few disclaimers after watching my parents make a similar decision with my grandparents.
My parents moved into my mom's childhood home with her parents, and renovated to build out a second floor with separate living/sleeping space (no extra kitchen). This was great in that the property became the de-facto gathering place for a large and geographically distributed family, and in a crunch the house could comfortably sleep 10 while my grandparents kept their comforts.
That said some things were not smooth:
* My parents and grandparents had trouble directly addressing uncomfortable topics. A significant example of this was when it was time for my grandmother to stop driving. The car would start to show surprise scratches and dents. My parents did not want to challenge my grandmothers stated sense of independence, and also had not budgeted a way to allow her to run her errands while they worked without driving (a driver a few hours a week, essentially). I consider this a high-liability failure.
* I got the sense that money was also not talked about directly enough, and there was frequently an undercurrent or sense of resentment about who was footing what bill, and whether said bill was even necessary.
* My mother, very sadly, started to deeply resent her parents after a long while for her perception of being trapped by the situation and unable to move on to other lifestyle choices. Part of this was due to my father taking a job out of state and being flying back for weekends, and my mom wanting to just join him in the new city full time. This resentment really soured their final years together, and is a real shame. Know going in that the decision you're making may go a decade longer than you initially calculated, and that your goals and priorities may shift in that time too, I guess.
* My younger sister moved in with the four of them in her early 20s while trying to re-figure out how to launch. The result was a lot of arrested development and strange regressive relationship behavior - my sister literally started acting like a pre-teen around my parents again, they started talking to her like a child, and my grandparents went back to the scorn-filled gramp-grumps they'd been with little kids. Everyone leapt backward 10+ years in terms of their adult relationships and communication methods with each other.
In the end, my grandparents were well cared for in their final years, and everyone did have more together time. The main benefit was the central gathering place for the extended family, and the house would fill for a few weeks of each year across all the holidays. I bought a house with room to build out a first floor en-suite that I hope my parents or in-laws will someday use, but I'm also keenly aware of the hiccups above. I think the main thing is clear communication about expectations, finances, and boundaries. Which I guess isn't different from normal life :)
Struggling to directly address things isn't really our failure mode (if anything, we tend in the other direction). With the specific example of driving, I don't expect much of an issue there. My wife and my mom frequently run errands together anyway, so I expect that will just become the default. My dad will be annoyed, but he's a _very_ pragmatic and risk-averse person and my guess is he'll be the one to make the call (probably earlier than we would)
We talked a lot about money going in, and one of the requirements was that the house had to be something that my wife and I could afford entirely on our own. We own the house (my parents aren't on the deed). If my parents moved out tomorrow, we'd have to tighten up a little bit, but we wouldn't be at any risk of having to move if we didn't want to. My parents pay us monthly based on a sq ft percentage of the house (utilities, taxes, etc), and they have invested a fair bit in their side of the house out of their own pockets (renovating the kitchen, building a small addition, etc... things that also benefit us in terms of value of the property)
As far as your second two points... time will tell... We're not far enough in to run into those issues yet. I think we're all on board for the long haul (3+ decades), but that's easy to say now. We do have regular intentional check-ins about how things are going to make sure we all still agree on where we're at and where we're going.
Your summary is spot on. If you nail expectations, finances, and boundaries, I suspect you'll be in good shape.
All in all, it has been a huge quality of life increase for us. It's really great for our kids to have such a close relationship with their grandparents, and there are significant practical benefits for us as well (my wife and I are able to get away for a weekend every few months, something made much much easier by the fact that we have "live in childcare")
My parents moved into my mom's childhood home with her parents, and renovated to build out a second floor with separate living/sleeping space (no extra kitchen). This was great in that the property became the de-facto gathering place for a large and geographically distributed family, and in a crunch the house could comfortably sleep 10 while my grandparents kept their comforts.
That said some things were not smooth:
* My parents and grandparents had trouble directly addressing uncomfortable topics. A significant example of this was when it was time for my grandmother to stop driving. The car would start to show surprise scratches and dents. My parents did not want to challenge my grandmothers stated sense of independence, and also had not budgeted a way to allow her to run her errands while they worked without driving (a driver a few hours a week, essentially). I consider this a high-liability failure.
* I got the sense that money was also not talked about directly enough, and there was frequently an undercurrent or sense of resentment about who was footing what bill, and whether said bill was even necessary.
* My mother, very sadly, started to deeply resent her parents after a long while for her perception of being trapped by the situation and unable to move on to other lifestyle choices. Part of this was due to my father taking a job out of state and being flying back for weekends, and my mom wanting to just join him in the new city full time. This resentment really soured their final years together, and is a real shame. Know going in that the decision you're making may go a decade longer than you initially calculated, and that your goals and priorities may shift in that time too, I guess.
* My younger sister moved in with the four of them in her early 20s while trying to re-figure out how to launch. The result was a lot of arrested development and strange regressive relationship behavior - my sister literally started acting like a pre-teen around my parents again, they started talking to her like a child, and my grandparents went back to the scorn-filled gramp-grumps they'd been with little kids. Everyone leapt backward 10+ years in terms of their adult relationships and communication methods with each other.
In the end, my grandparents were well cared for in their final years, and everyone did have more together time. The main benefit was the central gathering place for the extended family, and the house would fill for a few weeks of each year across all the holidays. I bought a house with room to build out a first floor en-suite that I hope my parents or in-laws will someday use, but I'm also keenly aware of the hiccups above. I think the main thing is clear communication about expectations, finances, and boundaries. Which I guess isn't different from normal life :)