I used my mom as daycare until recently. After I had DD1 I took her to my mom's house. That worked out pretty well, no real issues. Then DD was home with me on ML with DS2. Then my mom started watching both kids at my house. We started them in daycare when DD was 2 and DS was 8 months. This was partly b/c 2 kids was getting to be too much for my mom, and partly b/c I changed jobs and was going from 4days back to 5.
There were Pros and Cons.
- Kids don't get sick like at daycare
- Don't have to get kids out in the morning, no packing stuff, no picking up at end of day
- My mom would help with tons of little things to make my life easier- empty dishwasher, prep bottles, make lunch, bring in the mail, kids laundry, etc.
- One on one attention (I think this is important during the young infant stage)
- Don't need to take off work if kids do get sick
- Having someone else in your space all the time
- House would be kinda mess with toys and stuff when I got home from work
- Issues with what food my mom let DD eat
- It was harder for my mom to get both kids out to playground, activities, etc.
- Hard to find backup care if my mom needed day off or something came up
Overall I think it can work really well with infants, but I think once kids become toddlers it can be better to use daycare. Besides they get more socialization with other kids, and lots of fun activities that they wouldn't get at home. The nice thing is you would still have your mom and MIL as backups when your LO gets sick. I would recommend you all agree to a trial period and put LO on the waitlists at DCs in case it doesn't work out for you.