If you are thinking of getting a new property, co-buying or joint purchasing a home with your partner, family or friends is an option that can offer a quicker path to home ownership. It is also a common way that people enter the property market, especially if they're buying to occupy. With property prices still increasing and the urgency and pressure to own ever-present, property co-ownership is a sensible option for anyone wanting to buy their first home or enter the market as an investor more quickly. 

But first, you have to learn how to co-purchase a property wisely and safely.

To ensure that co-buying or co-ownership is right for you, you need to take into account risk vs reward. When you are in a co-ownership, you can pool your money with friends or family to buy your first home, sooner. You also don't need to save a lot for a full deposit as you can combine your borrowing power to borrow the rest from a loan provider since you will both pay for it later on. It will also give you more options to choose from and will reduce a lot of costs like living expenses and bills.  

Discuss The Buying Structure

You can own a property in a variety of ways, such as personally, corporately, or even as a trust asset. Each structure has advantages and disadvantages; therefore it is essential to consult with a legal, tax, or financial consultant to determine which one will be most advantageous for you, especially when considering tax advantages.

Considering the basics of a home is also a must! Like the location, neighborhood, and establishments, such as restaurants or malls (if you are outgoing). 

You may also want to dive into the house details, like how many bedrooms or yard sizes you want. Above all, think about what kind of home will be best for living communally. That being said, you may want to look for a place where you can design wonderful communal areas that promote socializing and at the same time, a place where you have plenty of private spaces to retreat to when necessary.

Splitting The Ownership

Once you've decided to co-own a house, you need to discuss or settle an agreement on the rights and legal obligations of each joint owner of a property. You may want to discuss these matters with your lawyer before deciding to buy. Depending on your agreement most cases will cover who will reside at the house, and who will be responsible for the payments, like mortgages and property maintenance. In case of unfortunate events like death and bankruptcy, you need to put a plan for what happens with the property.

You may also decide to split the ownership share 50-50 or according to the percentage of your contribution. Your purchase agreement and certificate of ownership will both indicate that you are "tenants in common" in this situation. Each individual owns their own unique share, which they are free to sell, lease, or deal with in any other way they see suitable. 

If your co-owner is your partner you may want to opt to purchase the property as "joint tenants". This means you both effectively own the whole property. If again, an unfortunate event happens, if your significant other dies, the other half would assume the whole title to the property. 

Talk To The Experts

Property co-ownership is a good option but it’s not for everyone. So before anything else, it’s important to know the legalities and the risks involved before entering a co-ownership or joint ownership with someone.

Getting legal advice is always a good idea to determine whether you need a written agreement or not. This will help you know and reflect on all the details of split or joint ownership and any terms and conditions around the break of that agreement.

Talking to a realtor is also a key guide in home buying. They are also one of the best experts to reach out when you need help deciding what kind of home will work best for co-ownership. The experience of being in a home can help you extend your intuitive sense of what home means and refine your list of must-haves, deal-breakers, and compromises. 

Financial Impact And Future Purchasing Power

Another factor that lenders assess when determining whether to provide a mortgage to someone is the amount of debt that person is responsible for, and they will likely assume that each of you is possibly responsible for your entire mortgage payment. It could also be harder to make another purchase while you're still on the co-buy loan. You also can't buy and sell shares of a loan to others.

If you are also planning on buying the house using "cold hard cash" (which by the way will make it easier for everyone to enter or exit the arrangement), you can talk to your financial planner regarding the cash purchases and how to split the money and other arrangements.

Setting House Norms And Rules

When co-buying and living under the same roof, you have to set the rules. This means setting the quiet hours, whether pets will be allowed, rental policy, and other crucial things you want to add up. 

Having regular house meetings is also a good idea. It's pleasant to get together for regular check-ins and work parties, and it makes it simpler to handle issues or make changes to how you live together before misunderstanding occurs and erupts into raging volcanoes. Make an effort to maintain the relationship. It's easy to take each other for granted when you live together, but not too much. It's all about the work while enjoying it. 

Final Notes

To sum up, purchasing a house with others may sound exciting; however, it can also be challenging.

To prevent any future difficulties or disputes, it's crucial to have independent financial, tax, and legal advice. That way, you will also know and protect your rights and peacefully enjoy the property co-ownership for many more years. 

Nonetheless, you've got this! It may feel new, it may feel more complicated, but it can be done with the proper guide. And as always, if you need help on this matter, our team at RE/MAX Advanced Realty - Indy Home Pros is here to help!