How to Buy a Home With a Friend or Partner

Investing in a home with a friend or partner may allow you to buy a home you wouldn't otherwise be able to afford. Just be very careful about picking your partner!

Instructions

Difficulty: Moderate

Things You’ll Need:

• Contracts
• Financial Calculator
• Real Estate Attorneys
• Personal Organizers

1. Be confident that your partner is responsible and willing to take a fair share of the responsibility for maintenance and finances.
2. Discuss and agree on how mortgage, taxes, upkeep and improvements will be paid for.
3. Consider worst-case scenarios, such as a breakup or death. Decide now, when feelings are good, how you'll handle the situation.
4. Discuss what happens if one of you wants to sell and the other doesn't. Will the property automatically be put up for sale, or will one person have the option to buy the other person out? How will you establish a fair-market value?
5. Decide what to do if one of you stops paying his share. Will that force the sale of the property? What happens if one of you loses his job and can't pay his share of the bills?
6. Decide how you will hold title. In most cases, your only options will be as Tenants in Common or Joint Tenants. Study each option and note the differences.
7. Put everything that you've talked about and agreed upon in writing.
8. Begin the home buying process by getting prequalified - together.

Tips & Warnings

• Consider hiring an appraiser to establish fair-market value for your home in case one of you wants to sell in the future. Decide, when the agreement is made, who will pay for this appraisal.
• It would be wise to contact an attorney to have a simple, yet legally binding agreement drawn up to clarify all the points you discussed.
• The way in which you take title to a property can have significant legal consequences. Be sure you understand what these consequences are.
• Buying a home isn't something you can easily undo, so be careful in choosing your partner.