All of the great things that buying a home together makes possible—financial security, a stronger sense of community, better properties, sustainable living—are real and within reach. But first, you need a solid understanding of the co-buying process. Plan for each phase and you’ll set yourself up for success.
Phase 1: The Purchase Process
To quote Lyn Collins, we’re going to use what we’ve got, to get what we want. And the first step is figuring out what those two things are. The next is finding real estate professionals who can help.
- Priorities. What type of property are you looking for? Which amenities are important to you? Get a clear picture of what you and your co-buyers want.
- Budget. How much money do you have for the down payment? How about mortgage payments, maintenance, and utilities?
- Timeline. The co-buying process is often more involved than that of a traditional purchase. Finding a real estate agent who understands the timeline from start to finish is vital.
- Financial. Having more people on a mortgage means more buying power, but it also means more incomes to verify and more credit checks. A mortgage lender with co-buying experience will navigate these extra steps efficiently and effectively. And that means less of your time.
- Legal. There are several different ways to legally own your home (also known as “hold title”). The right attorney will make sure you find the one that works best for everyone.
Phase 2: Owning and Managing
The co-buying process doesn’t end when you close on a home. After all, the real goal isn’t buying a place, it’s enjoying it! Phase One is about co-buying. Phase Two is about co-existing.
- Renovations and Improvements. Will you patch or replace a leaky roof? What about an update to the kitchen? Lay out a clear process for addressing these sorts of questions.
- Terms of Division. How will your property be used? Will you list it as a vacation rental? Who will use which parts of the home, and which will be shared?
- Upkeep and Maintenance. Who will take care of landscaping? Or install new tile in the bathroom? If the answer is you or one of your co-buyers, assigning that labor a monetary value will keep maintenance and improvements simple. (This is called “sweat equity.” If you’d like to learn more about it, check out this Investopedia article!)
- Renting. What if someone decides to move out and rent their part of the property? What’s the process for finding a new tenant?
Phase 3: Sale and Exit
One of the biggest concerns potential co-buyers have is what happens when they want to sell. That’s why it’s important to lay out your process ahead of time. Think of it this way: would you fly a plane without knowing how to land?
- Sales Strategy. How will you determine the asking price, and what is your process for considering offers?
- Division. How will you divide the proceeds? If the purchase wasn’t set up as a co-buy in advance, an experienced attorney can be very helpful here.
The End—now get started!
Now that you’re familiar with the co-buying process, you and your co-buyers can plot a smooth course from purchase to sale. This is where a good legal contract comes in. You can read more about that in our article on co-ownership agreements. If you’re ready to make your co-ownership agreement, check out our Pairadime Product Suite to find out more about our online Agreement Builder.