Exploring the benefits of buying a house with a friend

If you would like to stop renting but don’t have the funds to buy a home yourself, it might seem unconventional, but co-owning a house can offer many advantages. It’s a smart option to start building equity sooner, instead of continuing to rent. Co-buying is also an option if you’re looking to earn income as a landlord. Let’s take a closer look at the positive aspects and important considerations if you’re thinking about this popular path to homeownership.

Partnering to buy rental properties can be an ideal opportunity if you’re looking to boost your financial position by venturing into real estate. Teaming up with friends or colleagues by pooling resources to buy properties can minimize the financial risk and streamline the path to success as an investor.

Sharing the experience of buying a house with friends and creating a shared living space is much more than just a financial decision. It can also help you build a community at home and create unforgettable memories. By working together, communicating and compromising along the way, you’ll enjoy:

A built-in social network where you can rely on others for companionship and support. From celebrating milestones to navigating daily life, you and your co-buyers can lean on each other for encouragement and camaraderie.

Shared responsibilities: Co-buyers can work together to complete chores, maintain their property and make home improvements. By sharing responsibilities, each buyer brings their personal skillset—from organizing to gardening to home repairs—to enhance home life.

More affordability and accessibility: By splitting the cost of everything from mortgage payments to utilities to maintenance, each person’s financial burden is reduced, making it possible to afford a bigger, better home in a more desirable location than if you were going at it alone.

Where do you begin if you’re seriously contemplating co-buying a home to live in with friends? Start by having open and honest conversations with your potential co-buyer(s). While their level of neatness and sleep schedule are important to think about, discussing your individual financial situations, long-term goals and preferences are key.

• Explore career aspirations: Make sure your co-buyer is aligned with you when it comes to professional drive and ambition. If all buyers are on an upwardly mobile career path with a stable income there will be fewer potential difficulties down the line. This is also a consideration when applying for a mortgage as each borrower will need to demonstrate steady, stable employment.
• Talk about romantic relationships: Ensure clear understanding about visiting or cohabitating with non-spouses and the potential for future marriage and/or children. When co-owning a house, everyone’s expectations should be clear.
• Understand the possibility of relocation: Is there any scenario where your co-buyer(s) would have to move to be closer to family or for work? Although life can change suddenly for anyone, being prepared for potential disruption can minimize the risk for all involved.
• Discuss home preferences: Make sure you gauge how much privacy and personal space is needed. From sharing one home with multiple floors to a duplex, triplex or multifamily setup, there are a variety of property types to consider.

These are just a few of the issues that can influence your decision to co-own a house. If you know you’re compatible and feel you can trust your friend(s) to share in this experience, it’s a good idea to contact your local Guild loan officer to get pre-qualified so you understand your joint borrowing power.

When co-borrowing a loan with a friend or friends, the process begins by jointly applying with your Guild loan officer and providing all necessary financial information. Each person’s income, assets and debts are reviewed during the application process to find out if you’re eligible for a mortgage.

Typically, the collective financial strength of all co-borrowers is assessed. The overall picture of all borrowers is taken into consideration to increase the chances of approval. This differs from borrowing as an individual or a married couple, where a primary borrower is usually named.

When buying large assets like real estate, it’s crucial to talk about what happens if one of the owners passes away. Will their share be transferred to the surviving owners (called joint tenancy)? Or will it be inherited by their family members, which is customary (known as tenancy in common)? An attorney can draft a legally binding contract addressing this and all the other important aspects of co-owning a house, including:

• How expenses will be divided
• Procedures for selling the property
• Rules for subletting
• Methods for resolving disagreements, should they occur