Buying a house with friends may seem like a good idea, but it comes with as many pros as cons.
Before embarking on this project, it is essential to consider certain factors.
The vocation of the house
It is important to clearly state the purpose of your joint purchase project. You can buy a home as roommates or invest in a recreational property (such as a cottage) that you can enjoy and rent out. By knowing the purpose of the house, you will avoid surprises and misunderstandings.
Everyone’s finances
Talking about money with lucidity and honesty is essential. You’ll need to lay your cards on the table regarding income, savings, down payments, loans, credit card debt, credit score, and expenses of all parties. When you make a joint mortgage, each party is responsible for ensuring that the monthly payment is paid in full each month. If the other buyers of the home don’t repay their share, you’ll be just as liable, even if your share is paid. This will allow you to establish your budget and then the amount of mortgage you will be eligible for.
Everyone’s long-term goals
Engaging in a real estate project with friends requires knowing each other’s plans for the future. Do they want to sell the house in a few years? Would they rather buy your share? Knowing this will help you avoid future misunderstandings.
Pros and Cons
Buying with friends can allow you to realize your real estate purchase project more quickly. However, since you are not the only decision-maker, all decisions will now be made together. So you’ll have to compromise and settle your differences even when you don’t agree. Together, you’ll have a larger down payment, which will allow you to contribute more reasonably to your budget. Your purchasing power will necessarily be better. However, it’s important to think about what will happen during the sale now.
Search for a property on the South Shore
If you’re looking to buy a home with friends, it may be worth considering Montreal’s South Shore. The South Shore is a booming area that offers a multitude of affordable and well-located properties for real estate buyers. It offers a wide variety of cities, each with its own unique character, offering options for any type of budget. In addition, the South Shore’s infrastructure is constantly improving, offering better transportation options and new attractions for residents.
Instructions for use for proper operation
If you are considering co-owning a property with others, you have two options.
The first is joint tenancy, where ownership is divided equally between the co-owners and if one of them dies, the property remains divided equally among the remaining co-owners.
The second option is joint ownership, where each co-owner owns a specific share, which may be different from those of the others. For example, two co-owners could each own 25% of the property while a third would own 50%. With a common property, you can divide the property based on each person’s contribution.
It is highly recommended that you consult with a specialist, such as a lawyer, to draft a detailed letter of agreement that clearly defines the clauses, expectations and responsibilities of each co-owner. This is important to avoid any misunderstandings or conflicts in the future, even if you are good friends. By putting details in this letter, you can address points such as the rules of use of the property, the possibility of renting it out, the distribution of costs, and the terms of sale of the property in case of a decision by one of the co-owners.
In addition to home insurance, it is important that each co-owner take out mortgage insurance that protects their investment. This insurance usually combines life insurance and critical illness insurance.
It’s also important to keep your finances under wraps and schedule regular meetings to review payments and renovations. In the event of late payment, it is recommended to intervene quickly to find a solution that avoids any negative impact on the credit of each co-owner.