Can friends buy together? Is it a good/terrible idea?

Shelga

As per title, is this something anyone has done? I have just moved back to Dublin. A lifelong friend is in London and has suggested buying an apartment in Dublin together. Both late 20s. I would live in it, we own it 50/50 and rent the other room out. We would come to a mutual understanding about every eventuality should one of us want to move out/move a partner in/buy each other out etc.

Seems absolutely impossible to buy anywhere alone, and we're both currently single so unlikely anything would change dramatically for around 2/3 years, possibly more. This would mean being able to buy a 2 bed apartment in a good area without either of us over-extending ourselves.

Would the banks even grant a mortgage in these circumstances, as we are friends, not a couple, and she lives in the UK? It's by no means something I have my heart set on, would be fairly wary in fact, just thought it was worth investigating and looking into in a sensible way. I also don't want to panic buy just to get on the ladder, in a Celtic Tiger mindset.

Thanks!

listermint

Terrible Idea, Friends and Family and money should not be mixed especially large sums of money.

Its a non runner from my perspective and will spoil relationships faster than you can say former friend.

ec18

i'd say ok, just make sure you have a co ownership agreement setting out each others rights responsibilities and what should happen in the event that one of you wants to sell

Icaras

Terrible idea, but if you want to do it make sure all potential issues are written down and agreed. Verbal agreement will change/evolve over time and things will be remembered differently.
Have you both lived together before?

sbsquarepants

As an investment, sure why not. To live in, I'd run a mile. I know a few people who've done it and it seems like it always ends in tears for one of them.

westernlass

It's really common in the UK and there are specific mortgage for this type of thing.  It's a great idea to get on the property ladder particularly since you both aren't planning on living in it.  You will need a contract drawn up and to discuss options for if either wants to get out of the arrangement. 

It's a good plan as wages increase and house prices rise so it may be more feasible for one of you to buy the other out after a certain number of years.  Or it could suit both of you to sell to gain back your investment plus potentially more after a few years. 

In effect ,you are both buying an investment property and renting it out.  You are choosing to be a tenant in effect of your own investment so you should be treated like so and have no more rights than your friend.  That should be ironed out at the beginning and then there should be no issue.  Also if you couldn't sell in a few years, a two bed apartment is still a good investment for renting out.

mel123

And then the friend wants to come and live with you, sure why not, its 50/50 remember.........and that's when the real fun starts *sarcasm

Remember the last housing bubble?? What if you are stuck with this apartment, co-owned with a friend, for the next 15 years, would you be happy?

There is just so many reasons why this is a bad idea OP, sorry!!!!

howyegettinon1

my old landlords(two brothers) bought a house together before bubble, must be about 350k mortgage, now house worth about 180k-200k and neither them are happy that their stuck with it and dealing with renting it out, can defo tell there is tension over it and their stuck with renting it out as selling it would put them into more debt

Don't do it!

daheff

As long as you both write up an agreement on how things are to be managed and that a future sale of the property will only be when X/Y/Z occurs then dont worry about it & go for it.


The key thing here is that you both go into this with your eyes open on what happens:

Who pays mortgage(obv both - but from what account)?
What happens if there is nobody renting the other room? Who does that payment shortfall go to?
What happens if one party cant pay their way -does the other pay up or is it sale time (And what happens if there is a shortfall on the sale...most likely you would be jointly & severally liable for any debts to the bank). A 'friend' in another jurisdiction could leave you high & dry with the debts. They are out of reach of the bank remember!



Personally I wouldn't. I'd also hazard a guess the bank wont lend as your friend is in UK.

That said it can work. I've heard of other people making it work and having no issues.

listermint

listermint wrote: »

Terrible Idea, Friends and Family and money should not be mixed especially large sums of money.

Its a non runner from my perspective and will spoil relationships faster than you can say former friend.

I never got the "not mixing family and money" phrase you see. I'd far rather have financial involvement with family than with almost anyone else possible as I trust them far more and problems are much easier to sort out. I would have no hesitation whatsoever in mixing "large sums of money" and close family members, in fact it would be preferable than non-family members.

As for buying with a friend, is it any more risky than buying with a gf/bf/wife/husband. Not really imo, possibly even less risky in some ways. There would just need to be clear agreements from the outset on what happens with partners, who will live there etc.

Sean Fantastic

Shelga wrote: »

As per title, is this something anyone has done? I have just moved back to Dublin. A lifelong friend is in London and has suggested buying an apartment in Dublin together. Both late 20s. I would live in it, we own it 50/50 and rent the other room out. We would come to a mutual understanding about every eventuality should one of us want to move out/move a partner in/buy each other out etc.

Seems absolutely impossible to buy anywhere alone, and we're both currently single so unlikely anything would change dramatically for around 2/3 years, possibly more. This would mean being able to buy a 2 bed apartment in a good area without either of us over-extending ourselves.

Would the banks even grant a mortgage in these circumstances, as we are friends, not a couple, and she lives in the UK? It's by no means something I have my heart set on, would be fairly wary in fact, just thought it was worth investigating and looking into in a sensible way. I also don't want to panic buy just to get on the ladder, in a Celtic Tiger mindset.

Thanks!

Avoid, avoid, avoid, avoid! If you do this you will look back in years to come and wonder why you didn't just live in a cardbaord box on the boardwalk as it will look less troublesome. I'd strongly suggest you look at areas that you can actually afford instead of crippling yourself with a foolish plan like this.

Sean Fantastic

Melissa Ugly Surface wrote: »

I never got the "not mixing family and money" phrase you see. I'd far rather have financial involvement with family than with almost anyone else possible as I trust them far more and problems are much easier to sort out. I would have no hesitation whatsoever in mixing "large sums of money" and close family members, in fact it would be preferable than non-family members.

As for buying with a friend, is it any more risky than buying with a gf/bf/wife/husband. Not really imo, possibly even less risky in some ways. There would just need to be clear agreements from the outset on what happens with partners, who will live there etc.

Good grief! Don't let your spouse/potential spouse hear that. Your lack of trust would be met with a frying pan to the back of the head methinks.

Vex Willems

Sean Fantastic wrote: »

Good grief! Don't let your spouse/potential spouse hear that. Your lack of trust would be met with a frying pan to the back of the head methinks.

if said spouse was to fire a frying pan, he'd be right to be questioning things!

smunchkins

I think its a great idea in theory, but a brave and lucky person who manages to implement it in the centre of Dublin at this time.
With the housing crisis the way it is, unfortunately it is unlikely to succeed.
I think part of the problem is that banking and construction haven't quite caught up to the new socio economic status of the population.
No longer is everyone getting married and settling down in to one house, two married people by the mid-twenties.
Instead we've struggling singles trying to do it on their own, people eventually married who suddenly come to the realisation that their two one bed flats out in Stepaside and Knocklyon are a hindrance and drain, and others without anything.
Really friends and communal buying schemes should be implemented here, as not everyone wants to settle in to regular family units, OR one bedroom apartments, but likewise do not want to be tenants their whole life.
Why not?
Lots of no's on this here, but we need to think of innovative ways to help all the many different demographic groups a changing society creates. Christiania like perhaps??!

PhoenixParker

I'd be wary of saying "were both currently single so nothing is likely to change". I was terminally single through my 20s and early 30s.

In March 2013 I met someone. In July 2014 we moved in together. Engaged in October, married in May 2015, sale agreed Dec 2015, baby born Sept 2016. Just over three years from single and broke to married mother and homeowner.

I can count five or six friends with similar rapid lifestyle changes. Once you hit late twenties you tend to either break up quickly or be moving in together within 18 months.

f@steddie

howyegettinon1 wrote: »

my old landlords(two brothers) bought a house together before bubble, must be about 350k mortgage, now house worth about 180k-200k and neither them are happy that their stuck with it and dealing with renting it out, can defo tell there is tension over it and their stuck with renting it out as selling it would put them into more debt

Don't do it!

My situation is similar to this. I would strongly encourage you to NOT do it. It's a nightmare. We are in a situation where one wants to sell but the other doesn't / can't afford to. Neither wants the property. One puts little or no work into the upkeep of the property. It frustrates me even writing about it.

Neon_Lights

As long as you had eventuallities agreed prior to moving in...

The sad fact is people change

witchgirl26

I would caution against this as well. A friend of mine is stuck in a hole because of buying an apartment with a friend. Bought together with the idea of renting it out. All went well until a minor disagreement over something else ended up leading to the end of the friendship. Now the other person is living in the apartment & refusing to sell despite the fact my friend wants to. My friend also can't get a new mortgage to buy with his wife because of the apartment he owns.

professore

Melissa Ugly Surface wrote: »

I never got the "not mixing family and money" phrase you see. I'd far rather have financial involvement with family than with almost anyone else possible as I trust them far more and problems are much easier to sort out. I would have no hesitation whatsoever in mixing "large sums of money" and close family members, in fact it would be preferable than non-family members.

As for buying with a friend, is it any more risky than buying with a gf/bf/wife/husband. Not really imo, possibly even less risky in some ways. There would just need to be clear agreements from the outset on what happens with partners, who will live there etc.

I know two brothers that went in to business together, all went great for a few years and now they are in all out war against each other.

With friends and family, you have the added complication of emotions, e.g. "that pup after I raised him single handedly for 20 years and that's the thanks I get when I want to move my motorbike into the living room / host aunty Mary and her 12 kids" / etc ... something to them that's perfectly reasonable but you think is insane and vice versa ... whereas with strangers you don't trust them anyway so you nail everything down in writing. Stangers are generally less likely to "try it on" too as they don't know you as well.

Electric Sheep

Sean Fantastic wrote: »

Good grief! Don't let your spouse/potential spouse hear that. Your lack of trust would be met with a frying pan to the back of the head methinks.

While I don't agree with the frying pan bit, it would be foolhardy to marry someone who does not understand the concept of "leave and cleave".

"Therefore shall a man leave his father and his mother, and shall cleave unto his wife: and they shall be one flesh."

4ensic15

Shelga wrote: »

Would the banks even grant a mortgage in these circumstances, as we are friends, not a couple, and she lives in the UK?

Thanks!

I would have considerable doubt that the banks would be interested. The banks have had more than enough hassle from these deals going pear shaped. Trying to repossess would be a nightmare. They would also regard it as a buy to let and want a 40% deposit. As they are lending to someone outside the jurisdiction there would be additional hassle. This is not to say it would be a good idea even if the banks were interested.

evolving_doors

No wayyyyy ... in yer twenties it's all 'ya cool... Let's be BFF ' then yer in yer thirties and wanting to get on with yer own life.

You'll start counting up all you ' put into ' keeping things going while your friend has you ' managing her investment ' with zero effort.

Money and friends ... never in my books.

PhoenixParker

witchgirl26 wrote: »

I would caution against this as well. A friend of mine is stuck in a hole because of buying an apartment with a friend. Bought together with the idea of renting it out. All went well until a minor disagreement over something else ended up leading to the end of the friendship. Now the other person is living in the apartment & refusing to sell despite the fact my friend wants to. My friend also can't get a new mortgage to buy with his wife because of the apartment he owns.

This speaks to another aspect. You can have everything completely outlined in a watertight contract that covers every eventuality but that doesn't mean you'll have the wherewithal to enforce the contract.

Say you agree apartment will be sold in the event of X, but when X happens your friend says no. How much time and money have you got to force the issue? You could be years and 000's of €€ trying to get it sorted.

__Alex__

Melissa Ugly Surface wrote: »

As for buying with a friend, is it any more risky than buying with a gf/bf/wife/husband. Not really imo, possibly even less risky in some ways.

Less risky buying with a friend than with a spouse?

__Alex__

__Alex__ wrote: »

Less risky buying with a friend than with a spouse?

Not so much a married couple I suppose, but an awful lot of people buy when they are just going out. I know far more couples who break up* than friends that stop being friends.

*not saying these all have bought properties or anything.

appledrop

No No No No No. Please don't do this. I know people who have bought together as friends + others who have brought with family members during the boom + they have all gone horribly wrong. Don't do it.

Also if property crashes again + either of you meet a partner + want to buy a second home you could be in trouble. Walk away now!!!!!!!!!!

Stay lifelong friends

Dont buy together would be my advice

mrslancaster

there was a lot of this happened during the last bubble, I know friends / family who bought together for exactly the same reasons as op , they all ended badly.
in one situation one party was made redundant, went to Australia to work and left the other party in a right mess.

another situation two friends bought a house and after a year one got married & wanted to sell but market had collapsed, house was in NE & rental income dropped massively in the downturn. another mess

sounds great idea now but things can change very fast, just be very careful

__Alex__

Melissa Ugly Surface wrote: »

Not so much a married couple I suppose, but an awful lot of people buy when they are just going out. I know far more couples who break up* than friends that stop being friends.

*not saying these all have bought properties or anything.

Yes, it's a mistake to buy as a couple without a solid commitment. But that's pretty rare and doesn't detract from the terrible idea of friends buying together. Look at the examples on this thread alone.

dibkins

Me and my buddy own a house together for 11 years. The only weird bit was when he moved out and i lived there alone, i couldn't figure out what "rent" to charge myself, so i just paid the whole mortgage until i moved on too.
We have a legal agreement for what happens if either stops paying their share, or if one person wants to sell up etc. I think it is pretty watertight. Don't ad hoc it whatever you do, hammer down the details and get them in a contract.

I probably wouldn't recommend it to you tbh, despite my example being smooth sailing.

Oh, and being a landlord sucks.

daheff

Just to weigh in on this again.


Think of this as going into business with somebody (which effectively it is).

so long as you treat it this way and have any and all ground rules in place as if it were a business then there is no difference to buying a property or selling other services to clients.


You would be setting up a property rental company, house/apt is the asset you are leasing out.

People get a bit caught up with these types of agreements as they let 'home ownership' feelings & emotions enter the equation.

evolving_doors

daheff wrote: »

Just to weigh in on this again.


Think of this as going into business with somebody (which effectively it is).

so long as you treat it this way and have any and all ground rules in place as if it were a business then there is no difference to buying a property or selling other services to clients.


You would be setting up a property rental company, house/apt is the asset you are leasing out.

People get a bit caught up with these types of agreements as they let 'home ownership' feelings & emotions enter the equation.

I think the difference here is that the OP would be living in said investment whilst the other investor would be off site.
Emotions would be difficult to avoid whilst the op would effectively be an onsite manager whilst friend would be silent partner ...
Would both be investing the same amount?
But I suppose without the partner the op would be paying dead money or worse... not being able to find any place to live.

pauliebdub

I wouldn't dismiss it, it worked out very well between me and a reliable friend. Shared a bought house for over ten years with no drama. Time came to move on, it was amicable and we both left with 50 k in our pockets.

Mrs OBumble

I know people who did this when they were 40, and it worked very well for them. After 10 years, one bought the other out, and they're both far better off for it. Neither could have bought otherwise.

Ayuntamiento

I know 2 women who did this. Friend number 1 went on to acquire a truly awful boyfriend who basically moved himself in to the property. Friend 2 moved back to her parent's house because this boyfriend was so grotesque and obnoxious to live with.
Property market collapsed. Both were left with huge negative equity. Friendship ended.
Last I heard they'd gone their separate ways and the property was sold. However they both now live in small duplex apartments in rough areas of Dublin so the decision has obviously followed them.