Ready to buy a house with a friend of mine...co-ownership.

[CTrain]

A friend of mine and his GF been wanting to buy a house for a while.
They make plenty of money($90K++ between the both of them) but their problem is they don't have much money for a down payment. They have about $10K.
So their monthly mortgage would be $1600+ without the 20% down.

Myself, I have over $30K cash ready now(over $50K if I sell my whole life insurance.).
I want to buy a house too but then I have to find a couple of roomies to help me with the mortgage.

This is what we proposed:
Lets say I put down $30K and he put down $10K to buy a $200K house.
The mortgage would be around $1100-1200/month and I pay $400 plus 1/3 utils and they pay $800 + 2/3 utils.

So lets say, we sell the house 3 yrs later and we are in the plus for $100K(our down payments + the gain).
Since I put down $20K more, I would get my $20K back + 5% interest($1000 per yr).
After 3 yrs, I would get my $23K back first......then we split the $77K in half.

Why I think this is good for me
I'm single and I don't want the burden of owning a house by myself right now.
Me and him have been roommate before and we got along.
I would already have 2 roomies already.
I'm paying $350 rent right now and I get 0 equity out of that and I will only be paying $400 for the new house.
Orlando is a booming market right now...I can't lose.
My money is getting 3% interest right now....

Obviously its a great deal for him as he can't buy a house right now without taken a huge penalty for not having 20% down.

We will both sign a contract detailing the agreements.
We will live together 5 yrs MAX....they will then get their share and buy their own house then.

The way I look at it, I can't lose and he can't lose either.
People with experience in this....give me your thought.

 

[Mill]

Buy your own house -- anything else is stupid and asking for trouble.

 

[Viper GTS]

Absolutely not. Under any circumstances.

Viper GTS

 

[PHiuR]

do it, as long as you know youll get along with them 1000000%

 

[CTrain]

Heres another thought.

If I was putting down $30K and he only put down $10K and we split the mortgage in half and at the end we split like the way I explained...then he would have the huge advantage.
But since I'm only payingf 1/3 of the mortgage, at the end, I think we are pretty even.

 

[Kipper]

Put the agreement in writing, get it notarized or prepared by an attorney.

Friends are friends until money gets involved...

Personally, I wouldn't trust a couple financially when they can only put down roughly 10% of their total income as savings, regardless of their character.

 

[Sluggo]

Sounds like a recipe for disaster to me.

Things always sound great on paper, too bad people and their emotions usually come along and ruin it.

 

[CTrain]

For those who are oppose to it...please explain your view.

I do get along with them.
I know then for yrs and him for over 10yrs.
I live with him before and we get along fine.

 

[Brule]

Doesn't sound too good IMO. Would there be some way where you could actually own the house? In that way they could pay rent to you and you could formalize any lending agreement seperate.

All the complexlities would add up. (single + a couple + you have majority of equity, etc)

 

[Yossarian]

bad idea to get a house with a couple. you will lose 2v1 in all issues. you should buy the place and get roommates as needed.

 

[Viper GTS]

BTW there is no excuse for your money only getting 3%.

Viper GTS

 

[Brule]

Originally posted by: CTrain
For those who are oppose to it...please explain your view.

I do get along with them.

NOW

I know then for yrs and him for over 10yrs.

I've dealt with the living situation involving couples. I knew the guy since grade school, were great friends, and still things got uncomfortable.

I live with him before and we get along fine.

Was this when he was single, in college, or in any way had different life goals at the time? I'm playing a bit of devil's advocate but for good reason. If you truely think it will work good luck.

 

[Kipper]

Originally posted by: CTrain
For those who are oppose to it...please explain your view.

I do get along with them.
I know then for yrs and him for over 10yrs.
I live with him before and we get along fine.

Shakespeare said it best:

"Neither a borrower nor a lender be, for a loan oft loses both itself AND friend..."

Lending your buddy $20 or $200 is one thing, but you'd be surprised how quickly a "good friend" of years disappears into thin air when the numbers go up into the stratosphere. The risk is simply TOO great to accept.

Couple this with a pair of individuals who don't seem to be fiscally responsible and you have a bad combination. If they make nearly six figures and are able to save only a miniscule fraction of it, what makes you think they'll be able to pay a mortgage on top of that? You seem to be a very fiscally responsible person, given the level of your savings. I think you could get a loan very easily with a reasonable rate.

Your interest amount also does not factor in inflation, which is currently quickly rising. Your interest rate of 5% assumes less than 2% inflation per year over the duration of the loan, or you are getting screwed in that department (assuming you're currently earning 3%). You could earn far more from a 10-year CD or bonds.

 

[CTrain]

Originally posted by: Yossarian
bad idea to get a house with a couple. you will lose 2v1 in all issues. you should buy the place and get roommates as needed.

I can't be obligated with a $1200 mortgage right now.
Finding a couple of roomies that I can get along with is easier said than done.

I will only agree to buying a brand new built house...less complication.
I will only be paying $400 of the $1200 mortgage while getting 1/2 of the equity the whole time.

I do realize there is risk involve but if we put everything on paper, the risk will be limited.

 

[everman]

Not a good idea. If you do, you're going to need a lawyer to draw up a good contract.

 

[CTrain]

Originally posted by: Viper GTS
BTW there is no excuse for your money only getting 3%.

Viper GTS

The reason for that is that I need it to be readily available.

 

[Sluggo]

What happens if they split up and his new g/f doesnt like you?

Do all the repairs get split 3 ways?

Do all improvements split 3 ways?

What if there is disagreement about what to improve?

As stated, you lose all democratic votes. 1-2

What if someone gets laid off and cant complete their end of the agreement. Do they have to move out? Do they get their money back right then?

Is the housework all split 3 ways?

What if you want a dog, or they want a cat, or someone wants a pot bellied pig?

What if the neighbors start to talk and you guys are accused of having wild 3-way sex parties?

Does everyone get a garage space? Will anyone have to park in the street?

There are about 100,000 things that could go wrong and just a handful of ways for everything to go right.

 

[skyking]

"never lend a friend money you cannot do without"................

A house is a poor thing to share in. One of you can buy it and the other chip in to help cover costs, but splitting it financially and legally is bad berries.

 

[Viper GTS]

Originally posted by: CTrain

Originally posted by: Viper GTS
BTW there is no excuse for your money only getting 3%.

Viper GTS

The reason for that is that I need it to be readily available.

Why do you need 30-50K liquid?

That's just insane.

Viper GTS

 

[CTrain]

Let me explain their financial situation better.

My friend is also a store manager at a McDonalds and he makes over $50K/yr.
He's been one for a while now and his GF is just working part time for McDs right now.
His GF just accepted a store manager position and she's make over $45K easily.

Hes been pretty much supporting her the whole time so thats why he hasn't been able to save up that much yet.

 

[CTrain]

Originally posted by: Viper GTS

Originally posted by: CTrain

Originally posted by: Viper GTS
BTW there is no excuse for your money only getting 3%.

Viper GTS

The reason for that is that I need it to be readily available.

Why do you need 30-50K liquid?

That's just insane.

Viper GTS

To buy a house
$25K is pure cash.
$5 I can borrow from parents.
$20 is whole life insurance I can sell, so I don't know if thats considered liquid.

 

[DrPizza]

1. Bad idea
2. They can't afford 1600 with their income?? After taxes, I'd guess they were bringing home at least 5k a month. No children? What other debts/expenses do they have that uses too much of their income??

 

[CTrain]

Originally posted by: Sluggo
What happens if they split up and his new g/f doesnt like you?

Do all the repairs get split 3 ways?

Do all improvements split 3 ways?

What if there is disagreement about what to improve?

As stated, you lose all democratic votes. 1-2

What if someone gets laid off and cant complete their end of the agreement. Do they have to move out? Do they get their money back right then?

Is the housework all split 3 ways?

What if you want a dog, or they want a cat, or someone wants a pot bellied pig?

What if the neighbors start to talk and you guys are accused of having wild 3-way sex parties?

Does everyone get a garage space? Will anyone have to park in the street?

There are about 100,000 things that could go wrong and just a handful of ways for everything to go right.

Now we're talking.....I know everyone is oppose to it but at least you came up with possible conflicting scenarios.

Its not a 1/3 thing.
I get 1/2 of all decisions.
His GF is like the renter thats paying the other $400 rent.

We can have a clause to where is either one of us default on the mortgage, the other will get the 100% equity of the house minus the downpayment.

Neither any of us are in jeodardy of not having a job.
My buddy(lets call him Jon) is the son of the owner. The guy I'm thinking about buying a house with is his brother in law.
Basically all 3 of us are at the top of the food chain(as pertain to McDonalds) and we would never have a problem of finding a job.

 

[PELarson]

What does "your" lawyer say? Other than asking you to sign the commitment papers.

 

[gwlam12]

share rent. but dont own a house together.

i see house ownership as something for the long-term. wouldnt u want someday to have a family in a house that you and your family own? so i dont really see the point in purchasing a home when you'll be moving out of it in the near future (unless you plan to stay there and kick your friend out.. .OR, unless you both plan to sell it and move out).

its probably obvious i dont know what i'm talking about.