An interesting new homebuying trend emerging among millennials is home purchases that are completed with a friend. It’s a creative solution to the housing market given tough qualifying rules and high prices. Pooling your resources is a great way to take you from the fringes of homeownership to landing what you really want and getting a start on wealth building.
Here are a few of the things you’ll want to talk about before you get started:
- Detached, condo or something else? How many bedrooms/bathrooms and what amenities do you both want? Are you the fixer-upper types or do you want move-in ready?
- What can you both afford? Remember to factor in closing costs including lawyer’s fees. Put a budget together that includes property taxes, any condo fees, heat and hydro, internet, cable, anticipated maintenance costs, and household expenses.
Next, talk about how co-ownership will work, and consider getting legal advice and a legal agreement outlining roles and responsibilities, including:
- whether ownership is divided equally among the buyers, or by some other percentage based on what you bring to the purchase and ongoing costs;
- how you plan to divide and use the space within the home, and any mechanism for dealing with conflicts;
- how you are going to divide ongoing and one-off expenses;
- how you want to handle household chores, repairs and maintenance;
- what happens if one co-owner wants to sell their share for any reason? Will the other owner(s) have first right of refusal to buy their share? And how will you establish a fair market value for that share?
- what if one person is unable to afford to continue to pay his/her share of the mortgage for any reason?
Today many young millennials get their money working for them early through property partnerships with friends. A little pre-planning and you could be hosting your joint housewarming party!