Author Topic: Home Purchasing – Sibling/Family Co-Ownership Experiences?  (Read 3604 times)

krock

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Home Purchasing – Sibling/Family Co-Ownership Experiences?
« on: April 29, 2014, 12:43:17 PM »
I was wondering if anyone here has previously purchased a property/home(s) with a sibling/family member (as a joint-purchase) and if they could speak to the pros/cons of doing this (benefits, challenges, how you set up the mortgage, etc.)?

In multiple conversations, my brother and I have both casually expressed interest in possibly starting a “family compound” sometime in the future (initially we’ll either buy a property with a main house/in-law garage apartment, or a property with multiple houses on it). Financially speaking, this method of home ownership seems like the best option for my brother and I to get out of the rental game and build up personal/family equity (and to also maintain/build upon our extremely positive family dynamic).

Other than mentioning that my brother and I have maintained a 100% positive relationship throughout our lives, I’d appreciate it if this conversation kept family dynamics out of the equation (there will always be tragic stories of family feuds erupting, which end in joint-ownership catastrophe).  I’d like to hear about people’s objective/technical experiences surrounding property co-ownership with family members, not their subjective/emotional experiences.

Sharing any thoughts and/or resources explaining the technicalities of co-ownership are greatly appreciated!

Thanks.

CommonCents

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Re: Home Purchasing – Sibling/Family Co-Ownership Experiences?
« Reply #1 on: April 29, 2014, 01:30:46 PM »
Keep good records and write DOWN all agreements.  Try to preeptively think through issues like how will you decide on unexpected repairs and house rules.
« Last Edit: April 30, 2014, 08:09:25 AM by CommonCents »

waltworks

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Re: Home Purchasing – Sibling/Family Co-Ownership Experiences?
« Reply #2 on: April 29, 2014, 01:38:45 PM »
The emotional end IS the technical part.

Just kidding. Family and money are usually a bad mix for lots of reasons but it can work. Some of the challenges will be:
-Writing up legal agreements covering *all* contingencies (if someone dies, has kids, if someone wants to sell their portion, if you discover oil on your land...no matter how weird, you probably need to have something set up)
-Getting financing. If you are trying to pool resources to qualify for a loan... it's going to be tough. Underwriters hate hate hate stuff that is outside the norm and non-married adults pooling money is weird in their book. Start talking with a good mortgage broker now. If you can pay cash, obviously not an issue.
-If you are going to be building structures, you may want to find an architect who has dealt with multi-generational family compound type homes (these still exist in the SW to some extent) or do a lot of homework on what will work and what will cause problems. There are facilities that can be shared and save a bunch of $ - but do you want to share them?

I'd buy 2 lots side by side and just be neighbors, personally.

Good luck!

-Walt

Spartana

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Re: Home Purchasing – Sibling/Family Co-Ownership Experiences?
« Reply #3 on: April 29, 2014, 02:13:38 PM »
My sister and I bought a house together. We also lived there together - sort of. We were both divorced, kidless, and debt free. I was ERed and wanted to travel a lot but wanted a home base. She was working and wanted a larger place and would be happy to watch my dog for long periods of time. So getting a house together was good both financially (bought at bottom of the market) as well as for our individual lifestyles. We didn't have any issues but I think the "living together" part can cause just as many problems as the "financial" part.  Although we barely saw each other and even when I was around it was like we lived alone. We paid cash for the house - each contributing 50% - and continued to split everything 50/50 for most things. We made rules about overnight guests/BFs, common areas and cleaning, etc... Pretty much like you do with a roommate. As well as decisions about how we'd handle home improvements, maintenance and repairs and their costs, and what we would do if one of us had to, or wanted to, sell.  No real problems came up.  Selling the house now since she was transferred for her job, but otherwise we really had not problems.

MarkAW

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Re: Home Purchasing – Sibling/Family Co-Ownership Experiences?
« Reply #4 on: April 29, 2014, 05:37:45 PM »
My brother bought a house in metro Detroit in 2004 for around $90k, a little under appraised value.  It's current value is around $50k.  In 2010 we agreed to try to rent it.  However, the process to fix everything was slow while we lived there, so we moved out, thinking that would give us ample time to work on it without our stuff there.  This wasn't really the case as neither of us showed urgency to finish fixing it up.  It is also located in a lower income area, and much of what we did to the house was overkill.  We ended up finally getting it advertised in the summer of 2013, and rented in October 2013, slightly rushing to get a tenant in when it was finally ready.

Lessons learned
1) research everything quickly, read blogs/forums to get more info and learn
2) scout the area to see what other houses in the area look like and rent for
3) move out and make a plan to fix things accordingly, and then execute the plan as quickly as you can

What was a loss leader for my brother also turned into a loss leader for me and an even bigger loss leader for him since we wasted a couple of years goofing around.

We are both marrying this year, but are considering future rental properties in the near future.  We will do the second one the right way!

wickemt

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Re: Home Purchasing – Sibling/Family Co-Ownership Experiences?
« Reply #5 on: April 30, 2014, 08:37:42 AM »
Consider titling the home in the name of an LLC, and vesting ownership of the LLC in you and your brother. It makes things a little easier if and when one or the other of you wants to sell or move.

See for example:  http://www.wmitchell.edu/lawreview/Volume38/documents/1.Callison.pdf