New relationship- new investment property together?

[GD29]

Greetings! I’m a 45 year old in a year long relationship and we are looking to start living together. I am seeking advice about the following best steps. We live in Denver, Co and I currently own a home that has about 172k mortgage left and is estimated at 650k. 2.5 interest rate and 1650 mortgage.

SO can easily move in and pay rent/utilities at 1.1k per month which cuts down his 1800 monthly apartment rate but this isn’t helping him per building equity.

We’ve looked into buying together with me keeping my home as a rental at 3k per month, so income producing.

We are approved at 650k for new property though that’s a stretch for us. Combined income is 175k We have about 60k for down payment.

Thoughts? Good to invest? Or hunker down together? We will likely stay in Denvet for at least 5-8 more years but might consider smaller, walkable cities if we could find positions?

[Sibley]

Nope. Don't buy property together. Your SO isn't building equity now if they're renting anyway, and the reduction in expenses will allow them to save/invest more easily. And don't sell that house. The equity and interest rate give you a lot of options if the economy goes sour.

[Freedomin5]

Do not buy property together, especially if you're not married. You all have only been together for a year. Do not mix your finances. And even if you decide to get married and have been together for a decade, still consider carefully whether or not you want to mix your finances, especially if your or SO have children or ex-spouses from previous relationships (not saying you do, just saying it's something you need to consider).

[Paper Chaser]

No reason to jump straight to property ownership. If you want to live together, have him move in with you. It benefits both of you, and will give you a chance to trial living together. He won't be building equity, but he will be saving $700/mo that can be invested, and you will have reduced housing costs as well that can be added to your own savings. You can always buy together in the future if that seems like the right path, but there's zero reason to rush it.

[Metalcat]

Talk to a lawyer before you do anything.

[uniwelder]

Besides the risk of buying a house together when you haven't even lived together yet, I have a different question to ask. 

If your current house is worth 650k and you want to keep living in the same city, then why do you think you can buy something else for hopefully less money that will better suit your needs?  What would your new house have that your current home does not?

[GD29]

That's a great question--  We did find a bigger home with a basement that could possibly be income producing in a slightly less expensive neighborhood. My home is 1280 square feet and this one about 1700 square feet.  The neighborhood is about five minutes from my home so very convenient to my home.

That, and the idea of something that would be both our equity we'd be investing in....

[Paper Chaser]

Why does building equity matter?

Equity only matters when you sell a property. Until then, it's just a number on paper. If the plan is to live there, then building equity does no good. Cohabitating, and each of you saving/investing more of your income will leave both of you better off whether you both own the property or not. That's what's going to actually build your wealth.

[theoverlook]

Early in a mortgage you're not building even $700/mo in equity. He could put his new found $700/mo into index funds and be money way ahead versus buying something. You're dating, and only for 1 year so far, don't buy real estate together.

[Mustache ride]

I think the point is made already, but just in case… Don’t buy together after one year of being in a relationship.

I echo everyone’s thoughts above that having them move in with you and pay rent is the best option from a financial standpoint.

[Telecaster]

A lot to unpack here.   It looks like SO would save about $1000/month by moving in.  Is that roughly correct?   

IMO, building equity is oversold.  For many of our parents and grandparents, that's how they built most or at least lots of their wealth.  But that's not the only way, or even necessarily the best way to do it.   If the SO can sock away that extra $12K/year that likely is better than trying to build equity in real estate.   

[Metalcat]

A lot to unpack here.   It looks like SO would save about $1000/month by moving in.  Is that roughly correct?   

IMO, building equity is oversold.  For many of our parents and grandparents, that's how they built most or at least lots of their wealth.  But that's not the only way, or even necessarily the best way to do it.   If the SO can sock away that extra $12K/year that likely is better than trying to build equity in real estate.

And then he can use that savings to buy into equity in the house if/when they decide to make the relationship more permanent.

[spartana]

OP I'm somewhat in your situation* and will echo what others are saying: don't buy together yet. The relationship is too new and there's a risk that, if things go badly, you'll be financially, legally and physically attached to your SO while dealing with separating your joint property and assets.

In your case, since it seems you want to keep your current house,  having your SO move in with you and pay rent and split utilities would be the best bet. You save, your SO saves, you get to live together without and legal or financial obligations. In time, if all goes well,  you can then decide if and how you want to share housing.

*SO and I are not married but we've been together a fairly long time. We have no kids from past relationships or prior financial obligations to our ex-spouse's. We both owned our seperate homes.  Our choices when we decided to live together were:

1). one sells and moves in with the other as a "renter" with no legal claim to the house
2). One sells and moves in with the other and pays them 1/2 of the current house value (no mortgage) and gets added to the deed.
3). We both sell and rent together and invest our sale proceeds separately and keep finances separate.
4).We both sell and buy a place together with 50/50 ownership.
5). We rent out one or both places and live together (buy or rent) in another place we get together.

We are currently doing #3 but plan, eventually, plan to do #4. There are some issues to #4 if you are not married such as how to hold title, who gets the property if one dies and want to leave their share to someone else, or if one wants to sell and the other doesn't, if one amassed huge bills from a law suit or medical problem and they consider your property joint property and come after your share of the equity, etc. So owning property together after such a short term relationship may have longer term financial issues you'd need to discuss and work out.

[Dicey]

Hell no!

[Missy B]

You need a cohabitation agreement before he moves in. You will need to get that from a lawyer.

It needs to be in writing that the house is your property and stays your property.
It needs to be in writing that no portion of the house or the increased value of the house of the house becomes his when common law kicks in, and that he is paying rent, not buying in to the value of your house with his monthly payments.

All this has to be in writing. If he agrees verbally but never signs anything, the verbal agreement is meaningless.

[spartana]

You need a cohabitation agreement before he moves in. You will need to get that from a lawyer.

It needs to be in writing that the house is your property and stays your property.
It needs to be in writing that no portion of the house or the increased value of the house of the house becomes his when common law kicks in, and that he is paying rent, not buying in to the value of your house with his monthly payments.

All this has to be in writing. If he agrees verbally but never signs anything, the verbal agreement is meaningless.

I don't think the US has any states with common law marriage anymore, or that legally recognize a cohabitation agreement like Canada and other countries do, but something written out and and signed and notarized by both could help in legal matters. Usually with unmarried couples their separate property and assets remains remain separate unless you do something to legally combine them like add them to a deed as a co-owner. But good for the OP to check their state (CO) law to be sure.

[Dicey]

Greetings! I’m a 45 year old in a year long relationship and we are looking to start living together. I am seeking advice about the following best steps. We live in Denver, Co and I currently own a home that has about 172k mortgage left and is estimated at 650k. 2.5 interest rate and 1650 mortgage.

SO can easily move in and pay rent/utilities at 1.1k per month which cuts down his 1800 monthly apartment rate but this isn’t helping him per building equity.

We’ve looked into buying together with me keeping my home as a rental at 3k per month, so income producing.

We are approved at 650k for new property though that’s a stretch for us. Combined income is 175k We have about 60k for down payment.

Thoughts? Good to invest? Or hunker down together? We will likely stay in Denvet for at least 5-8 more years but might consider smaller, walkable cities if we could find positions?

Sorry, but whether or not he builds equity isn't your problem. But just for funsies, maybe you can share more about how you came to own a home with tons of equity and an ass-kicking mortgage rate...and he didn't. One year is way too short a time to put yourself at such an apparent risk.

[ixtap]

You need a cohabitation agreement before he moves in. You will need to get that from a lawyer.

It needs to be in writing that the house is your property and stays your property.
It needs to be in writing that no portion of the house or the increased value of the house of the house becomes his when common law kicks in, and that he is paying rent, not buying in to the value of your house with his monthly payments.

All this has to be in writing. If he agrees verbally but never signs anything, the verbal agreement is meaningless.

I don't think the US has any states with common law marriage anymore, or that legally recognize a cohabitation agreement like Canada and other countries do, but something written out and and signed and notarized by both could help in legal matters. Usually with unmarried couples their separate property and assets remains remain separate unless you do something to legally combine them like add them to a deed as a co-owner. But good for the OP to check their state (CO) law to be sure.

FYI, there are still about five states with common law marriage and Colorado is one of them.

[spartana]

You need a cohabitation agreement before he moves in. You will need to get that from a lawyer.

It needs to be in writing that the house is your property and stays your property.
It needs to be in writing that no portion of the house or the increased value of the house of the house becomes his when common law kicks in, and that he is paying rent, not buying in to the value of your house with his monthly payments.

All this has to be in writing. If he agrees verbally but never signs anything, the verbal agreement is meaningless.

I don't think the US has any states with common law marriage anymore, or that legally recognize a cohabitation agreement like Canada and other countries do, but something written out and and signed and notarized by both could help in legal matters. Usually with unmarried couples their separate property and assets remains remain separate unless you do something to legally combine them like add them to a deed as a co-owner. But good for the OP to check their state (CO) law to be sure.

FYI, there are still about five states with common law marriage and Colorado is one of them.

Wow I had no idea! I wonder how that works when not all states recognized that? SO and I live together and are buying a place together but otherwise not combining finances so I believe what's mine will always be mine and what's his will always be his. But that's for unmarried people in Calif. I wonder if that would change if we moved to one of the 5 "common law" states and how far back would they count? Although I have heard of some famous wealthy people in Calif who co-habbitated with a non-married (and much poorer) SO who were taken to court to try to enforce a common law marriage when the broke up.

[NotJen]

You need a cohabitation agreement before he moves in. You will need to get that from a lawyer.

It needs to be in writing that the house is your property and stays your property.
It needs to be in writing that no portion of the house or the increased value of the house of the house becomes his when common law kicks in, and that he is paying rent, not buying in to the value of your house with his monthly payments.

All this has to be in writing. If he agrees verbally but never signs anything, the verbal agreement is meaningless.

I don't think the US has any states with common law marriage anymore, or that legally recognize a cohabitation agreement like Canada and other countries do, but something written out and and signed and notarized by both could help in legal matters. Usually with unmarried couples their separate property and assets remains remain separate unless you do something to legally combine them like add them to a deed as a co-owner. But good for the OP to check their state (CO) law to be sure.

FYI, there are still about five states with common law marriage and Colorado is one of them.

Wow I had no idea! I wonder how that works when not all states recognized that? SO and I live together and are buying a place together but otherwise not combining finances so I believe what's mine will always be mine and what's his will always be his. But that's for unmarried people in Calif. I wonder if that would change if we moved to one of the 5 "common law" states and how far back would they count? Although I have heard of some famous wealthy people in Calif who co-habbitated with a non-married (and much poorer) SO who were taken to court to try to enforce a common law marriage when the broke up.

My understanding of common law is that you have to mutually want to be married, and you have to present yourself as married.  I assume if you had a bad breakup and your SO tried to sue you for a common law divorce, you'd want to be able to prove that you never called them your husband/wife, never filed taxes as married, never signed documents as married, never used their name, etc.  And also make sure they don't do the same.

[ixtap]

You need a cohabitation agreement before he moves in. You will need to get that from a lawyer.

It needs to be in writing that the house is your property and stays your property.
It needs to be in writing that no portion of the house or the increased value of the house of the house becomes his when common law kicks in, and that he is paying rent, not buying in to the value of your house with his monthly payments.

All this has to be in writing. If he agrees verbally but never signs anything, the verbal agreement is meaningless.

I don't think the US has any states with common law marriage anymore, or that legally recognize a cohabitation agreement like Canada and other countries do, but something written out and and signed and notarized by both could help in legal matters. Usually with unmarried couples their separate property and assets remains remain separate unless you do something to legally combine them like add them to a deed as a co-owner. But good for the OP to check their state (CO) law to be sure.

FYI, there are still about five states with common law marriage and Colorado is one of them.

Wow I had no idea! I wonder how that works when not all states recognized that? SO and I live together and are buying a place together but otherwise not combining finances so I believe what's mine will always be mine and what's his will always be his. But that's for unmarried people in Calif. I wonder if that would change if we moved to one of the 5 "common law" states and how far back would they count? Although I have heard of some famous wealthy people in Calif who co-habbitated with a non-married (and much poorer) SO who were taken to court to try to enforce a common law marriage when the broke up.

My understanding of common law is that you have to mutually want to be married, and you have to present yourself as married.  I assume if you had a bad breakup and your SO tried to sue you for a common law divorce, you'd want to be able to prove that you never called them your husband/wife, never filed taxes as married, never signed documents as married, never used their name, etc.  And also make sure they don't do the same.

I am not a lawyer, but supposedly if one party can provide a few witness who thought they were married/ consistently referred to them as spouse's without being corrected, they might be able to pull it off. But yes, common law marriages were initially meant to declare themselves spouses without having to wait for the itinerant judge to come around, rather than giving the paramours a backup plan.

You can also formalize a common law marriage. You basically register it, without having to get a license first. Not sure that would help with the states that were ignoring such marriages, as it still isn't actually a marriage certificate.

We recently picked up our marriage certificate, just shy of our eleventh anniversary. Since gay marriage was approved, I haven't even heard of anyone being asked to prove they were married.

[spartana]

You need a cohabitation agreement before he moves in. You will need to get that from a lawyer.

It needs to be in writing that the house is your property and stays your property.
It needs to be in writing that no portion of the house or the increased value of the house of the house becomes his when common law kicks in, and that he is paying rent, not buying in to the value of your house with his monthly payments.

All this has to be in writing. If he agrees verbally but never signs anything, the verbal agreement is meaningless.

I don't think the US has any states with common law marriage anymore, or that legally recognize a cohabitation agreement like Canada and other countries do, but something written out and and signed and notarized by both could help in legal matters. Usually with unmarried couples their separate property and assets remains remain separate unless you do something to legally combine them like add them to a deed as a co-owner. But good for the OP to check their state (CO) law to be sure.

FYI, there are still about five states with common law marriage and Colorado is one of them.

Wow I had no idea! I wonder how that works when not all states recognized that? SO and I live together and are buying a place together but otherwise not combining finances so I believe what's mine will always be mine and what's his will always be his. But that's for unmarried people in Calif. I wonder if that would change if we moved to one of the 5 "common law" states and how far back would they count? Although I have heard of some famous wealthy people in Calif who co-habbitated with a non-married (and much poorer) SO who were taken to court to try to enforce a common law marriage when the broke up.

My understanding of common law is that you have to mutually want to be married, and you have to present yourself as married.  I assume if you had a bad breakup and your SO tried to sue you for a common law divorce, you'd want to be able to prove that you never called them your husband/wife, never filed taxes as married, never signed documents as married, never used their name, etc.  And also make sure they don't do the same.

That makes sense as there are lots of people in long term platonic live-together (and even buy together) situations that are just friends and roommates. We've never done anything that would make us overtly be seen as "married" other than living together as a couple so doubt that would be an issue. But interesting to know and see what other states do.

[Dicey]

You need a cohabitation agreement before he moves in. You will need to get that from a lawyer.

It needs to be in writing that the house is your property and stays your property.
It needs to be in writing that no portion of the house or the increased value of the house of the house becomes his when common law kicks in, and that he is paying rent, not buying in to the value of your house with his monthly payments.

All this has to be in writing. If he agrees verbally but never signs anything, the verbal agreement is meaningless.

I don't think the US has any states with common law marriage anymore, or that legally recognize a cohabitation agreement like Canada and other countries do, but something written out and and signed and notarized by both could help in legal matters. Usually with unmarried couples their separate property and assets remains remain separate unless you do something to legally combine them like add them to a deed as a co-owner. But good for the OP to check their state (CO) law to be sure.

FYI, there are still about five states with common law marriage and Colorado is one of them.

Wow I had no idea! I wonder how that works when not all states recognized that? SO and I live together and are buying a place together but otherwise not combining finances so I believe what's mine will always be mine and what's his will always be his. But that's for unmarried people in Calif. I wonder if that would change if we moved to one of the 5 "common law" states and how far back would they count? Although I have heard of some famous wealthy people in Calif who co-habbitated with a non-married (and much poorer) SO who were taken to court to try to enforce a common law marriage when the broke up.

That's where the term "palimony" comes from.

[spartana]

You need a cohabitation agreement before he moves in. You will need to get that from a lawyer.

It needs to be in writing that the house is your property and stays your property.
It needs to be in writing that no portion of the house or the increased value of the house of the house becomes his when common law kicks in, and that he is paying rent, not buying in to the value of your house with his monthly payments.

All this has to be in writing. If he agrees verbally but never signs anything, the verbal agreement is meaningless.

I don't think the US has any states with common law marriage anymore, or that legally recognize a cohabitation agreement like Canada and other countries do, but something written out and and signed and notarized by both could help in legal matters. Usually with unmarried couples their separate property and assets remains remain separate unless you do something to legally combine them like add them to a deed as a co-owner. But good for the OP to check their state (CO) law to be sure.

FYI, there are still about five states with common law marriage and Colorado is one of them.

Wow I had no idea! I wonder how that works when not all states recognized that? SO and I live together and are buying a place together but otherwise not combining finances so I believe what's mine will always be mine and what's his will always be his. But that's for unmarried people in Calif. I wonder if that would change if we moved to one of the 5 "common law" states and how far back would they count? Although I have heard of some famous wealthy people in Calif who co-habbitated with a non-married (and much poorer) SO who were taken to court to try to enforce a common law marriage when the broke up.

That's where the term "palimony" comes from.

Pals with money haha!