Buying with family members

smurph10

Hi I'm looking at buying a house round the 250,000 mark. I'm in a fully permanent job and would be renting out 2 rooms while living in the other myself. I have two brothers who are thinking of helping me with the purchase as in they'd own a 1/4 of the house each and I'd own half. I'd be paying 130,000 and they'd be paying in and around 60,000 each. My question is on the logistics of the whole thing. Has anyone done this before, is it a major complicated process.
They are two close brothers and I know people say it changes when there is money involved but that would simply not be the case.

Any advice/views would be greatly appreciated..

snubbleste

Don't do it.

Flippyfloppy

Will they be living there or purely investing? What if they want you to sell up at some stage and you don't want to? If you do a huge extension that adds value to the house?

Santa Cruz

smurph10 wrote: »

Hi I'm looking at buying a house round the 250,000 mark. I'm in a fully permanent job and would be renting out 2 rooms while living in the other myself. I have two brothers who are thinking of helping me with the purchase as in they'd own a 1/4 of the house each and I'd own half. I'd be paying 130,000 and they'd be paying in and around 60,000 each. My question is on the logistics of the whole thing. Has anyone done this before, is it a major complicated process.
They are two close brothers and I know people say it changes when there is money involved but that would simply not be the case.

Any advice/views would be greatly appreciated..

What is the tax implication of the renting? Will they be receiving a 50% portion of the rent and if not why not?
If they both decide they want their share recovered will you be forced to sell or meet their demands?

morrigan2014

snubbleste wrote: »

Don't do it.

+1.

Are you a friend of the two brothers? I really think this is never a good idea. Especially if you are younger and perhaps in the future you might want to buy a home on your own or with someone else. I know someone who bought with 2 male friends at the height of the boom and is now engaged to a girl and they want to buy a house but can't get rid of his part of his house because of negative equity.

Regarding the legalities I'm not sure myself.

jon1981

Bad idea unless they have the cash to spare and will never put pressure on you to buy them out in a hurry and they have their house already or make enough money so this house does not hamper their ability to get a mortgage down the line. Also can you have 3 legal owners on a mortgage?

seamus

morrigan2014 wrote: »

+1.

Are you a friend of the two brothers?

They are his/her brothers

It does depend on the dynamics. I know with my own brothers, this wouldn't really cause any problems. We're close and straight with eachother and wouldn't fall out over money.

However, you're not thinking long-term. You're going to live in the house and rent out two rooms. For how long? Hardly forever. So you meet someone and decide you want to settle down. What then? Are you going to kick out your renters and pay rent to your brothers, or are you going to move somewhere else? Then what happens to the property?

What if one of your brothers falls into financial difficulty? Will you arrange to buy him out?

This happened quite a lot during the last boom, people going 3/4/5 ways on a property with the intention of flipping it after 3 years. Then the arse fell out of the market and suddenly these people found themselves financially tied together over a property that none of them want.

Ultimately it sounds like you want to buy a home and your brothers want to help you out while investing at the same time. It's not a bad idea from your POV, especially as you'll be an occupier landlord. But it does mean that all 3 of you are tied to the property and as such the future of that property is directly tied to the financial situation of the 3 of you. When (not if) one of your situations change (e.g. someone wants to go to Oz for 5 years), then all 3 of you are affected.

TL;DR: It's not a terrible idea, but you need a long-term plan and a list of "what-ifs". They don't need to be formal contracts, but you need to agree why you're all buying this and what you plan to do with it.

Santa Cruz

seamus wrote: »

They are his/her brothers

It does depend on the dynamics. I know with my own brothers, this wouldn't really cause any problems. We're close and straight with eachother and wouldn't fall out over money.

However, you're not thinking long-term. You're going to live in the house and rent out two rooms. For how long? Hardly forever. So you meet someone and decide you want to settle down. What then? Are you going to kick out your renters and pay rent to your brothers, or are you going to move somewhere else? Then what happens to the property?

What if one of your brothers falls into financial difficulty? Will you arrange to buy him out?

This happened quite a lot during the last boom, people going 3/4/5 ways on a property with the intention of flipping it after 3 years. Then the arse fell out of the market and suddenly these people found themselves financially tied together over a property that none of them want.

Ultimately it sounds like you want to buy a home and your brothers want to help you out while investing at the same time. It's not a bad idea from your POV, especially as you'll be an occupier landlord. But it does mean that all 3 of you are tied to the property and as such the future of that property is directly tied to the financial situation of the 3 of you. When (not if) one of your situations change (e.g. someone wants to go to Oz for 5 years), then all 3 of you are affected.

TL;DR: It's not a terrible idea, but you need a long-term plan and a list of "what-ifs". They don't need to be formal contracts, but you need to agree why you're all buying this and what you plan to do with it.

There's usually no problem with brothers. It's when the bloody wives stick their oars in that the problems start

moxin

Money and house issues can destroy families. It may seem hunky dory now but there will always be trouble ahead as circumstances change for everyone. Don't do it.

the_syco

smurph10 wrote: »

Hi I'm looking at buying a house round the 250,000 mark. I'm in a fully permanent job and would be renting out 2 rooms while living in the other myself.

And you'll have no problem with them living in the other two rooms should they ever need them? Remember; they're on the mortgage, and will probably have more right to the room than any possible children you have in the future...

Pro Hoc Vice

smurph10 wrote: »

Hi I'm looking at buying a house round the 250,000 mark. I'm in a fully permanent job and would be renting out 2 rooms while living in the other myself. I have two brothers who are thinking of helping me with the purchase as in they'd own a 1/4 of the house each and I'd own half. I'd be paying 130,000 and they'd be paying in and around 60,000 each. My question is on the logistics of the whole thing. Has anyone done this before, is it a major complicated process.
They are two close brothers and I know people say it changes when there is money involved but that would simply not be the case.

Any advice/views would be greatly appreciated..

If you can't afford the house alone or if you can't get the loan alone don't do it. I am really wondering has the country forgotten the period between 2002 and 2008.

R0C

There's a case in my area like this.

The brother living in the house moved his girlfriend in. The investor brothers [who didn't live there] didn't like the girlfriend and tensions built.

Few years passed, a couple of kids entered the equation, and now she is living in the house with the kids, the brother in the house has long since been kicked out, and not only has he lost his house but also no longer has a relationship with his brothers who could see all along what was coming.

While your circumstances may be suitable for such an arrangement now, things can change dramatically a few years down the road, particularly when you add girlfriends/wives into the equation.

Do not do it.

Live within your means.

Buy a house you can afford to pay off on your own.

spockety

I think I have just stepped into a property bubble time machine.

Pro Hoc Vice

spockety wrote: »

I think I have just stepped into a property bubble time machine.

It's amazing the number of these types of threads in last few months I have to keep checking post dates, it's mental.