If You Can’t Afford To Buy Alone, Buy With A Friend
Friends and colleagues are buying together as a way to get out of the renting scene and into home ownership
By Marcia Luke - New Dream Homes and Condos
Friends and colleagues are buying together as a way to get out of the renting scene and into home ownership. Whether you actually live together or if it’s purely for investment, this can be a viable option.
There are some considerations that come with this option though, that you might not have to consider when buying on your own or with a spouse. What’s the best way to make this option work for everyone and how can you protect your investment and still manage to create an agreeable living environment? It can be done!
Craig Harris, a firefighter in Brampton, bought a house in July 2006 with his two friends, Mark and Ryan. All three live in the house together. Their main motivation in buying a house together was to get ahead by putting money down on a mortgage instead of paying out rent. Since none of them could afford to buy alone, they decided to go in on a house together. Below is a Q&A outlining some of the things they considered and how it worked out successfully for one group of friends.
NDHC: What types of things did you have to consider because of your situation that would be different from a couple or family buying a house?
CH: As a group, we have to be prepared for any unforeseen expenses such as new shingles or a new air conditioning unit, etc. If we weren’t prepared for such a thing, then whoever had the money at the time would have to front the money, and that’s not right. What we do to prepare for this is each pay an extra $50 to 100 a month on top of what we need to cover the bills, and this way we build up a surplus of money.
Another major thing that must be considered is what is going to happen when someone wants to move out of the house. We have come up with three options:
* Option 1 is that a person can rent out their room to cover their part of the mortgage;
* Option 2 is to re-appraise the house and buy that person out of their share of the house;
* Option 3 is to sell the house altogether and everyone starts from scratch. With us, we kind of have it planned so that we will all be here for two years minimum, and I think by then we will probably all be ready to buy on our own or with girlfriends.
NDHC: Did anyone give you any special advice?
CH: Someone told us to make up a list of who does what chores and have a rotation so no one gets the short end of the stick.
NDHC: How is it working out?
CH: So far, so good. Everyone seems to think that it’s impossible to live in a house with friends, but to tell you the truth, as long as everyone does their part, it’s a blast and it’s better than throwing your money away renting.
NDHC: Are you happy with your decision?
CH: Yes, I am!
Other Things To Consider
It can be done, but it’s best to consider all the options and circumstances that might complicate such an arrangement. Consulting your lawyer, insurance agent and real estate agent ahead of time will give you the best information.
* Insurance coverage might need to be adjusted depending on the arrangement.
* Keep a detailed budget of who spends what each month so that there aren’t any disputes later on.
* Does everyone contribute equally or is it based proportionately on salary? What happens if someone loses their job or takes a pay cut?
* Everyone is responsible for their portion of the mortgage, but if one person is unable to pay, the others must make up the payment for them.
* What happens if someone has to move suddenly or their partner/spouse needs a place to stay?
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