would you buy real estate with a friend?
Back during the housing boom of the mid nineties, I used to walk around NYC with friends, pointing at empty, rundown buildings in not yet up-and-coming neighborhoods and joke, “We should buy that!” The idealist theory was that we could scoop up a four story building, renovate, and then live like kings with neighbors we loved. Needless to say, that never happened. One thing (besides cash) holding me back was the fear of embarking on a such a financial commitment with a friend. One hates to be pessimistic, but the pitfalls are easy to imagine. This week’s Time magazine has a story about this very concept. They’ve labeled it “Co-ho-ing”. Apparently we weren’t the first to think of it! Click here to see the article, which includes the tale of Stewart and Jeff, in the photo above. And then let me know: Would you buy real estate with a friend? — Angela M.
Photo by Sam Holden for Time
August 28th, 2008 at 6:12 am
I’ve known several people who have co-ho’d and it worked out great for some of them and a nightmare for others. I personally wouldn’t do it. I’m living with my boyfriend right now. We plan to get married, but I’m waiting to buy a home with him until we are married. It just seems things would be too complicated, and I think it’d be even more complicated with platonic friends.
August 28th, 2008 at 6:29 am
I would, but with many, many, MANY caveats. This friend would have to be someone I knew very well, who I knew followed through on things and was dependable, and who had all of the skills to finish the job that I didn’t, or was flexible enough to handle whatever compromises came up. They would have to be fair, practical, and honest. The stakes are just too high to get into with anything less.
August 28th, 2008 at 7:17 am
I thought about this when I was single and felt that I might always be single (I got married when I was almost 38). I’m glad I didn’t because the person I talked about it with (never very seriously) and I no longer are in touch for many reasons! I think I would consider this if I lived somewhere like San Francisco where real estate is so expensive and so scarce and there are a lot of co-owned buildings with separate flats.
August 28th, 2008 at 9:26 am
I would never, ever buy anything with someone I wasn’t married to. Even with an agreement, there just aren’t many legal precedents to guide you (or the courts) if something happened. What if one of you decided to move and didn’t have the money to buy the other out? Or you have a falling out. Or someone gets married and the other feels pressured to leave…too much risk.
August 28th, 2008 at 9:27 am
Oh my god, could they not come up with a better term than “Co-Ho”?
August 28th, 2008 at 10:02 am
Before I met my husband, he had planned to buy a place with his then-roommate. Fast forward to 3 months after dating him that roommate attempted to steal his identity. We had to pay thousands of dollars for this roommate’s transgressions, and my husband’s credit was ruined. So no, I wouldn’t buy real estate with a friend.
August 28th, 2008 at 1:05 pm
My husband did this in college because it was cheaper than paying rent. But of course, they were all lifelong friends of his who were very trustworthy. They made up their own legal contract and had a lawyer look it over and notorize it. They even had buy out clauses if anyone wanted to move out. (They all put down the same amount for the down payment). Since then they have all gotten married and moved out but the 2 who are still single live there. It’s been about 11 years now.
August 29th, 2008 at 9:41 am
I would, if I felt the friend or family member were the exact right person to go into business with, and if I had a top-knotch lawyer working with me to set up all the paperwork.
I watched a friend get into a co-housing situtation with a bunch of acquaintences that was, to put it mildy, ill-thought out.
It was a disaster from start to finish, and a legal nightmare, because there were no legal agreements up front… so only when the whole situation went downhill, were lawyers involved.
Yet another friend, in a very well-organized, planned, purchase, got together with the other tenants of their four-plex, purchased it, and turned it into a tenants in common. They had clear goals, clear expectations, clear contracts drawn up by their attorney… it worked out well.
Planning, planning, planning and clear communcations are vital.