There are many situations in which you can benefit from property co-ownership. For example, the arrangement can allow you to buy a house that you could normally not afford. However, it does have its complications, and you should prepare for them before beginning the purchase process. Here are some potential complications and how to preempt them:
Set Up Some Ground Rules
You can buy a house with your college friend only to have them sublet their room to another person that you can't stand. Your friend may even decide to start a business in the garage or in their room, which may see people streaming in and out of your house at all hours. Talking about your rules of engagement, so to speak, before buying the house can help you determine what is permissible and what isn't.
Discuss the Future of the Property
Few people want to co-own houses forever; eventually, you may want to own a home alone. Even if you think you can own a property with your best buddy or cousin forever, one of you may change their minds later. If this happens and you want to part ways, you may have problems deciding what to do with the property.
Therefore, this is something you should talk about before buying a property together. For example, you may decide to sell the house to one of you or sell it to a third party and share the proceeds. The best way to avoid future disagreements is to have a legally-binding agreement on what you will eventually do with the property.
Divide the Responsibilities
Lastly, you may also have a problem with responsibilities. You don't want to come to your property after a couple of months only to find that the co-owner isn't taking care of it as you had hoped. The responsibilities of owning a house go beyond the financial demands. This is especially true if you are buying an investment property and plan to rent it out.
Therefore, you need to discuss how you will handle these responsibilities in advance. You need to talk about the management, maintenance, and tax issues. You can divide these responsibilities between yourself because even if you plan to outsource all of them, someone has to look for the service provider or make the payments.
Think carefully before agreeing to co-own a property with another person. If you think co-ownership is the only way out for you because you can't afford a house on your own, talk to an agent about cheaper alternatives first. You may even be lucky enough to negotiate a lower price or increase your mortgage limit so that you can afford a house on your own.Share