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Thinking about buying a home with a friend? It can be a smart, cost-effective way to enter the housing market, but it requires planning. Here’s what you need to know before going halves on a home:
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Choose Your Friends Wisely: Financial partnerships can strain relationships. Run a credit check and look into judgments, liens, and bankruptcies to avoid surprises. If your friend is hesitant—red flag!
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Define Your Goals: Will this be your primary home or an investment? If it’s a rental, consider forming an LLC for liability protection.
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Apply for a Mortgage: Each co-buyer must submit a separate application. The lender will evaluate your group as a whole.
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Work Out the Details: Who gets the house on holidays? Who pays utilities? Draft a side operating agreement to prevent conflicts.
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Have a Plan: Create a legal agreement outlining exit strategies—what happens if someone wants to sell or can’t pay their share?
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Tenants in Common vs. Joint Tenancy: Decide how ownership is split. Tenants in common allows you to pass your share to your heirs. Joint tenancy means your share goes to your co-owner if you pass away.
Pooling resources can open doors, but clarity and preparation protect your investment—and your friendships!
Would you go halves with a friend? Forward to your potential co-owner! As your Renton real estate agent, we are here to help!
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