Two heads are better than one, they say; and two people can be better than one for buying property, I say.
Co-buying property is becoming a huge trend in real estate because houses are expensive – especially in major city centres across Canada. Many single buyers simply cannot afford get onto the property ladder without pooling resources with friends, family members or in some cases, total strangers.
Co-buying can have huge advantages, especially if buyers are looking to own a detached property or a multi-family income property. Pooling resources can give buyers more property options and increase the potential return on the property investment.
As I’ve recommended before in previous articles, parents buying property for students going to university instead of renting can be a smart idea. But better yet, co-buying a property can give the young person an even greater sense of responsibility while also cementing a solid foundation for future property ownership. Post-university, sharing an investment with family members can also be a good way to continue the climb up the real estate property ladder.
Friends and even strangers can be sources of potential co-buying opportunities. But like other types of partnerships, you want to be very certain of the business versus the human relationships involved.
Co-buyers can share title on a property to varying degrees, such as a “tenants in common” or joint tenants with right of survivorship, where someone’s share in the home passes to the other owners in the event of them dying. While most people won’t die during a tenancy, what’s more likely is a disagreement or change in circumstances that leads to a parting of ways. That might be entirely amicable if someone gets a new job, or it might not be if one of the owner is a victim of domestic violence from the other.
In those circumstances, co-buyers need to have very clear plans in place for what happens. Will one person buy out the other? Will one person be able to extract themselves from a mortgage if the other party is unwilling to buy the remaining share?
As well as preparing for the worst, prepare for the best. How will bills be divided up? How will repairs be paid for? Is everything an even split between two or more parties? Or will you take percentages based on the size of deposits?
As you know I will, I advise you speak to your real estate agent, and to your lawyer. Both will be needed for drawing up contractual agreements that cover every possible problem and eventual sale of the property. Like any purchase, it is unlikely to be for life, so you need to understand how proceeds – or losses – will be split when you move on, even if the couple or friends decide to co-buy again.
The days of sole property owners – or phrased worse, “the man of the house” – are gone, both because society has moved on and because prices have too. Even if one of the co-buyers is making just a modest contribution, it might make the difference between having a home you like, and having one you love. Even if it only adds a few dozen extra property options to your list of possibilities, I recommend you look into co-buying.
Put your heads together with mine and let’s see how much better life can be.
