With housing affordability at an all time low, it's no wonder some homebuyers are opting for a less traditional method of home ownership: buying a house with a friend. Think about it, young people just starting out in their careers are faced with having to save up for higher than ever down payments, closing costs, and emergency savings, all while the cost of living is soaring and student loans are out of control. Two (or more) incomes could really help in saving for the down payment and qualifying for the monthly payment. But should you make such a huge financial commitment with a friend? Let's get into it!
An obvious benefit to this arrangement as I discussed above is greater buying power. While some people are lucky enough to have family members co sign on a loan or gift a down payment, most people just don't have that option. A friend or two pitching in can be the difference between buying today or waiting to buy years down the road and missing out on equity.
Of course, a downside could be that if anything happens to your friendship, things can go sideways quickly. What if one of you gets a job in a different state or wants to move in with a romantic partner? What if the home needs significant repairs and only one of you can afford to shell out the money to do it? There is lots to discuss before jumping into home ownership with a friend, and stresses like these can put strain on even the best friendships.
While there are many pros and cons to this type of arrangement, if you do choose to move forward with purchasing a home with your friend, I would strongly advise that you first meet with a real estate attorney who can advise how to take title, whether or not to form an LLC, or give you any other tips to protect yourselves, your friendship, and your financial investment. And, of course, always hire a real estate pro to help you get the house!
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