Should You Co-Buy A Home?

If you’re looking to buy a vacation home on a beautiful Minnesota lake or searching for a home in trendy Uptown but it’s financially out of range, co-ownership might be right for you. Owning equal share in a property may be the best option to make your dream of owning a first or second home possible.

Buying a home with friends or family can be a smart investment. Your monthly bills will be lower, you’ll be able to afford a nicer home and you’ll share the upkeep responsibilities, all while building equity. However, no matter how close you are to your co-owners, approach ownership like you would a business deal. Do your homework ahead of time and think long-term.

Check out these tips before agreeing to co-ownership:

  • Are you compatible? Take a good look at your potential roomie and make sure you can see yourself living in harmony or at least in a civil relationship with them. Will your lifestyles be compatible? Dog vs cat person, morning vs night person; make sure the little issues aren’t going to turn into big ones.
  • The Numbers. Both of your credit reports will be used and one person’s bad credit can negatively affect the mortgage terms, costing you money. Lay out credit scores, monthly income, down-payment portions, extra savings accounts, retirement funds—everything. Buying a home together is a business deal; make sure you know who you are doing business with.
  • Credit Rating Risks. All co-owners are listed on the mortgage and are responsible for making payments – on time and in full each month. If anyone falls behind for whatever reason, the lender will report everyone to the credit agencies for non-payment.
  • Challenges Getting Other Loans. Thinking about financing a car or new boat in the near future? Even if you and your co-owner split the mortgage payment, each of you alone is responsible for the entire mortgage payment each month in the eyes of other lenders.
  • Exit Strategy. Prospective co-owners should discuss how to handle end-of-contract issues and work with an attorney to put them in writing. Most co-ownerships last only a few years. Will you sell the house? Buy each other out? You need to set yourself up to make sure you exit with your money intact and have a way to part with unhappy people.

If you’re worried the hard questions might risk your friendship or your deal, then maybe buying a home with friends isn’t the right choice. But if you can come to an agreement, owning without carrying the sole burden of all the costs and maintenance can be a great option.

Find an agent who is enthusiastic about making your situation work. Buyers come to the table with different expectations regarding how the buying process works. Having the right agent makes everything run smoothly. Contact The Garatoni Group and we’ll be with you and your co-buyers on every step.


Alicia Garatoni

Alicia Garatoni