Buying with Friends or Family!
In our area we are blessed to be surrounded by plenty of land, open space, and a lot of it is acre lots and over. And we desire it, we desire the acreage lifestyle and look for ways to make it affordable. I’m all for that. I enjoy it myself. Not always affordable by ourselves though so we look at alternatives to afford the dream and the idea of grabbing another couple and building two homes on one block comes to mind.
There are also other reasons we might consider buying with friends or family, singles starting out or families helping ageing parents. Whatever the reason we need to approach it with understanding & I especially emphasis having a solid exit strategy in place.
Ever been on a committee where you have conflicting personalities contributing to every decision? Well you’re about to join one.
If you’re borrowing money to fund the purchase this means that you’re all involved in each others decisions. There is one loan which will split your borrowings up so you can track your own loan, but, if you want to do anything you still all have to sign for it & at the end of the day if one of you stops paying the bank can only look at the one joint security.
That means if your friends are unable to pay their part of the mortgage you might have to make their payments or risk your home too, either way its potentially an irrevocable change to your home and your family.
What if you’ve bought with your husbands best friend & his wife who you don’t really love as much as him – then they split and she keeps the property, and her even more annoying new partner moves in?
Even if things go well a simple decision like putting a new car purchase on the home loan will require signatures from everyone, likewise drawing upon equity for improvements or investing. In the case of a larger property and in an ideal world there’s a time when you can subdivide & sell off individually, but don’t assume this will happen & enter with your eyes open.
The western weekender article