Should I Buy A Home With a Friend?

Real estate has consistently been among the most effective ways to strengthen your financial portfolio while building equity. When you are finished paying a mortgage off, you’ve got a house that is yours to own. This is in great contrast to renting, in which you can pay years and years of monthly rent and end up with nothing at the end.


While renting can have certain benefits since you’re not tied down to any property, there are many more advantages to owning a home such as not being restricted to the demands of a landlord (yes, you can have pets and redecorate the house any way you wish!), getting tax breaks that come with home ownership and the biggest advantage of building equity towards a sound financial future.
But wait! Are you dreaming of purchasing your first home, but feel overwhelmed about the process? Has the idea of owning been ticking in your mind but the realities of going through the buying process seem light-years away? Don’t fret! There is actually something very clever you can do to get closer to owning your own home and not have to confront all of the hefty mortgage payments alone. A growing tendency throughout North America now is for friends, or sometimes relatives, to buy property jointly becoming co-owners.

As more and more people are waiting to get married and have kids, it is reasonable to try and develop equity in the meantime. When you buy a house with a buddy, you maintain the property as an investment, rent it out, or simply live together as housemates. In addition, you have a choice about how you want to split up the equity. While it is common to own exactly half of the property, sometimes co-owners like to divide the property up unevenly so that one owner possesses more.
In its simplest terms, purchasing a house with a buddy means that you share all of the costs involved in actually buying and maintaining the house. This may include and is not limited to the costs of repairing and care maintenance, the down payment and all of the monthly mortgage payments. Because you will be initially saving a lot of cash, your buddy and yourself can also shop for a bigger property, or find one in a nicer location than you would have chosen otherwise.



The Many Benefits of Buying a Home With a Friend

Aside from the enormous financial benefits that come with leveraging the costs of the home as a co-owner, there are numerous other benefits that you can enjoy. For example, having the house viewed by a good friend as well as touring the area brings new perspectives and details that you may have missed. A good friend will always give you honest, objective opinions about the appearance of the house and the neighborhood, which can easily be overlooked when you are under the whim of excitement.


There is always a great deal of anxiety that comes with purchasing a brand new house, and it is easy to get carried away and miss crucial details. Having a trusted set of eyes behind you can prevent serious issues from arising in the future. Small holes left over from termites? A musty old furnace? A bad paint job? Your friend can often easily discover these things as good as any professional inspector, saving you hundreds or even thousands in repair costs down the road.


Many people – especially singles – often feel lonely about having to go out and buy a new home all on their own. With co-ownership, not only will the entire process of buying the home go more smoothly, but also you’ll have the ability share a house with someone you enjoy spending time with anyway. This can amount to less lonely nights and a more meaningful life, especially after the friends of your friend can come over to put on a huge house warming party!



Saving Money on Down Payment and Maintenance Costs


The greatest benefits that come with co-ownership are the ability to leverage costs involved with purchasing the home and maintaining it. Many first-time owners are afraid of offending their seller by presenting an offer that is too low and sure to be rejected. This is especially true if the house is already offered below market value or is an excellent deal to begin with.


Oftentimes, you can find remarkable homes in great areas offered by owners who are undergoing hardships such as divorce or bankruptcy. These homes are in excellent condition and usually sell very fast since they are priced well under market value. Yet, even so, many first time buyers have trouble coming up with the case required to snatch such properties since they are particularly prone to bidding wars. By leveraging the initial cost of down payment through adding a co-owner, you will be able to provide a competitive offer that knocks down all of the competition.

Next, there is the issue of qualifying for a loan, which if far easier as a partnership than as a sole owner. You might have the ability to qualify for financing that you would never be able to without a partner. Purchasing a home together with a friend might greatly assist you in offering an attractive down payment to win the home as well as help you lower your debt-to-income ratio. This will allow you both to pay off the home faster with less money being paid to the bank – and more in your pockets! It is also an ideal option for people whose credit is not perfect, as the bank is more likely to average out both of your credit ratings coming up with a new figure.



Cautions To Consider When Buying a Home With a Friend


Co-ownership undoubtedly has its advantages, but as with any venture, there’s room for battle if things go wrong. Before you even begin looking for a house together, both of you should hammer out all details and place them in writing. Do you want a 50/50 ownership, or something different? How much down payment is each partner willing to give? What are your monthly limitations regarding mortgage payments? How flexible are you about the location in which you want to locate properties and how flexible are you about the style and appearance of the home?


These are questions that must be considered before purchasing any property in order to minimize the risk of conflicts later on. If anything else, above all you both have to come to a mutual agreement about the cost range, the type of house you are seeking and the location in which you will be initially searching. Draft out a simple written agreement about how long you will both be determined to continue your search, and the number of houses that you will have to see before being ready to place an offer.


Another important consideration that should be discussed beforehand is the issue of what happens when one you wants to sell the house in the future before the other partner will be ready to. For example, what happens if one of you gets married in the meantime, or decides to cohabitate with their significant other? In renting scenarios, it is easy to simply leave the home and move on to another property. However, with co-ownership there will be a lot of legal paperwork that will accompany such a life change. Knowing what to expect long before such changes actually occur will minimize the potential for problems while saving your friendship.


Finally, there are small details that should be included in every written agreement such as deciding upon who will sleep in the larger bedroom, what kind of interior designing will take place, how you’ll settle the problem of cleaning and who will take care of groceries. There are also many small costs that can add up to huge amounts if not taken into consideration. These include all of the accessories that come with homeownership, including the fees for insurance, legal costs, agent and inspector costs, etc. During the excitement phase of purchasing a property, it is very easy to overlook such matters, but they are sure to create a lot of tension later on if not ironed out as soon as possible. By planning for the future, you can both minimize the potential for grief and stress.


A lawyer can professional draft out such a written agreement that determines exactly what your share is in the property and include what each partner will be responsible for in regards to sharing the expenses involved with such a purchase. Oftentimes, real estate terminology can be very tricky creating a lot of confusion among buyers and it takes an expert to decipher all of the terms of a contract.


When dealing with a partnership, such issues become even more complicated. For example, unpleasant topics will also have to be included in the contract, such as what will happen to the home if one of you passes away. Should the home pass on to one’s family or to another designated party after death? Other questions involve the right of one partner to buy the other partner’s shares in the property, the time commitments and future assets that each partner is expected to contribute, how arbitration will take place in case one partner is incapable of paying off debts and settling other potential disputes that can arise during the life of the partnership.

Be sure that you use your friend solely as a business partner and not additionally as your agent or mortgage broker. This can spell disaster in many cases. With all of the potential hazards and possible issues related to your real estate purchase, a seasoned professional can help direct you through all of the intricacies of your purchase, ensuring that everyone is treated fairly. Signing a new real estate contract can require many pages of fine print, and it is easy to overlook many details when performing such tasks with your friend under the disguise of comfort and security.

Finding a Realtor to Help You With Your Purchase

To enable you to purchase real estate with a friend, you have to locate an agent that you both can trust. Assessing on-line reviews and speaking to customers that have had previous experiences with a particular agent can certainly help. For example, if you’re interested in buying contemporary designs, don’t go for an agent that specializes in selling Victorian houses. A great realtor will also listen to the particular needs of their customers and act appropriately when a partnership is involved. Do not ever place yourself in a situation where you feel forced by someone you do not get along with.

The first step is to find a mortgage broker that assesses the needs of you and your friend before you actually start looking at houses. By doing so, a high-priced house that is unaffordable will not enamor you. Conversely, you won’t have to restrict yourself to lower-priced houses, especially in today’s times when low interest rates mean you can both borrow more than you think. There are other great reasons to follow their guidance. For example, by being pre-approved for financing, you won’t squander your time away looking at properties beyond your budget. Everyone, including your real estate agent will know exactly where you stand and what you can afford.

Next, it is very important to find a real estate agent that you both feel comfortable with. At this point, a trusted real estate agent will quickly be able to guide you into finding a home that you are both pre-qualified for. Oftentimes, this only takes a few clicks of a button as many real estate agents have a gigantic network of homes at their disposition. By knowing precisely what you can both afford, they will often find 3-5 properties that you can view right away within a couple of minutes of meeting them.

Other Tips For Buying a Home With a Friend


Here are several tips that could come in handy when you’ll be faced with the task of searching for a new home together with a partner:


  • Do not be afraid to ask family or friends for help. Just because you will be in a partnership doesn’t mean that you have to search for new homes in a bubble. Many people are very happy to help if you just let them or by asking around.


  • In order to increase the amount that you can both contribute towards the home, consider selling off any unnecessary valuables, such as jewelry, or anything you don’t use on a regular basis. By both doing this, you will increase your total equity pool twice fold, greatly increasing the number of properties you will be able to afford.


  • Never settle for the first house that you see. Always view multiple houses to get a feel for the current market and neighborhoods you are most interested in. Research and find many pictures of prospective properties on the net beforehand. This will increase your level of awareness and help you pay greater attention to detail when you finally find a home that you are ready to purchase. Also, be sure to attend open houses in order to get an up close perspective on all of a house’s amenities.


  • Take time when finding a real estate agent that you both feel comfortable with. This does not only including reading reviews and taking people’s word on the trustworthiness of your agent. Be sure to also find out about the time that the particular agent has already lived in the area you are seeking to purchase your home. An experienced agent can give you excellent insights on the friendliness, safety and overall living quality of the neighborhood. Find an agent that has lived a minimum of ten years in this area.


  • Both you and your friend must be clear about the goals of buying a particular home. For example, you must decide whether you are interested in owning the property for the long term or only for a short term. Partnerships that are not clear about such an option from the very beginning can put their entire venture into jeopardy one day and lose more from their investment than they had hoped to gain. By having clear goals from the very beginning, everyone wins.


  • Since you have more money to leverage as a partnership, consider hiring out a professional inspector to perform a detailed inspection of your desired property before buying. While a friend can certainly help you filter out undesirable homes in the beginning by offering a unique perspective on the property, a professional inspector offers a full-fledged guarantee that ensures you won’t be held liable for any costs arising from his/her errors.



Buying a friend with a home can be an excellent way to enter the house market for first-time buyers. You will work collectively towards sharing the pride of new home ownership, build up your personal financial security, and have a fun time while at it. As with any venture, there may be minor drawbacks here and there involved with the purchase. However, most of these can easily be ironed out in the very beginning by generating a formal contract with a lawyer. This can avoid any potential misunderstandings and troubles in the future.

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