Tips for Co-Owning a Home

NEW YORK — Real estate broker Amy McKenna and mortgage lender Ruby Grynberg work with groups of people who are interested in co-homeownership. The pair hosts info sessions nearly every month throughout Seattle on the finances, legalities and benefits of co-homeownership. Here are some of their expert tips on how to buy a home with friends.

Write out your intentions

Be clear with your friends about why you're doing what you're doing. Is it to save money? To spend more time with the people you love?

Two of the most common incentives for co-homeownership are affordability and community, McKenna said. Having an intentions document as a reference is critical to making sure that everyone is on the same page and is entering co-homeownership for clear reasons.

It's also critical to be aligned on expectations and contingencies. This includes everything from how to split expenses, such as emergency repairs, and how to share responsibilities and communal spaces.

Being able to articulate early on how you envision co-homeowner life on a day-to-day basis can help determine whether you should be a co-homeowner at all.

Put everything on the table

Buying a home with friends requires full financial transparency. That means being open not only about how much income each prospective homeowner has, but also other important details including net worth and total debt.

"You have to be comfortable being vulnerable with and sharing those details," Grynberg said. Otherwise, don't do it.

To that end, Grynberg also emphasized that buying a home – whether with a spouse, alone or with friends – is an extraordinary financial commitment.

"Anytime you make a financial obligation with another human, if that human falls on hard times, then that leaves you holding the bag," she said. On the other hand, buying with friends can also provide a critical buffer during hard times.

"If there are four people and one person loses their job, it's a lot less significant than half of the people losing their job," she pointed out.

Bring in experts

There are many ways friends might choose to finance a shared home, whether that's by contributing different amounts of cash, getting a shared mortgage or even borrowing from each other.

There are also many different ways for people to legally own the same home. Two of the most common are joint tenancy and a tenants-in-common structure, which have different ramifications on future rights.

When deciding on the financial and legal structure that works best for you, it's helpful to bring on experts, including real estate lawyers who can cut through the jargon and translate what co-homeownership will mean for you in the long run.

Have an exit strategy

No matter how optimistic you might feel buying a house with friends, there might come a time when one of you wants to leave.

Avoid unnecessary conflict by planning in advance for different types of exits. McKenna suggests that people outline processes for all sorts of likely and unexpected events, such as being laid off or even death.

Co-homeowners in Seattle described spelling out exactly what would happen if one owner wanted to leave: Who could rent out their share of the home, or who could buy their share if they wanted out.

"There's the ideal plan, and the ideal plan will probably change," she said. "As long as you agree and are talking about it, that's fine."

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