Many prospective co-purchasers ask themselves “Can this really work?”
Of course, it can!
With good planning, your co-ownership purchase can be a profound and rewarding experience. The following are 3 entries are studies from groups who co-purchased their homes. While not all of these groups remain together, their stories demonstrate the importance of preparation and following the 5 Steps.
Two Mothers
Step 1: The Purchasing Group
Two single mothers wanted to buy a property together. Each had one child. They saw co-purchasing as an opportunity for both of them to have access to a private home. In addition to shared equity and potential income, the agreement promised mutual support (child care), and an extended family.
Step 2: The Financing
One group member brought equity from a previous home sale. The other had a full-time job, but student debt. The home sale paid off the student loans. Equity was split 60/40, with the majority going to the member who provided the down payment from the sale of her previous property. The purchase price budget was $1 million.
Step 3: The Group Agreement
Each had their own separate unit. Dog care, child care, and tenant management were shared.
Step 4: The Legal Agreement
Among other things, they outlined the terms should a group member leave: If one left, the other had the right of first refusal. If new partners or roommates joined either of the single moms in the home, they would not have right to ownership—it would remain between the originators of the agreement.
Step 5: The Property
Areas with schools were a priority. They were able to purchase a triplex: equal, separate living space for both families, and a unit to rent to offset the mortgage.
By carefully assessing their needs and wants, these two women were able to form a shared idea of what their home would look like, and they were able to enter the housing market. They saw that purchasing a home together would build equity, and that there were also non-financial benefits of this arrangement, particularly for their children.
These co-purchasers assessed their financial portfolios and considered future scenarios. They were able to identify their mutual needs and compatibility prior to looking at any housing stock.
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