Should you buy a property with a friend or family member? Questions to ask before you buy.

Questions to ask before buying property with family or friends.

Have you ever asked a family member (not your spouse) or a friend to “go in” with you and buy a property? Have you ever been asked to partner up with a friend of yours to buy a property? If so, here are a list of questions I have compiled to help you make the right decision.

  1. What kind of property are you planning to purchase? (Home, Apartments, etc…)
  2. Describe the property (bedrooms, bathrooms, etc…)
  3. Where are you going to buy the property? (City, Area, etc…)
  4. How long do you plan to keep the property?
  5. Who is going to finance the property?
  6. Who is going to provide the down payment?
  7. How is the property going to be owned? Is it split evenly?
  8. Who pays for the repairs?
  9. Who does the repairs? Handyman? Do it yourself? Professional?
  10. Who determines how a repair is made and how much will be spent on them?
  11. Who will handle the accounting and will that person be compensated for it?
  12. Will you hire a property manager?
  13. When the property is sold, who keeps the profit?
  14. What if there is a loss on the property, who has to contribute?
  15. What if circumstances change and one of the owners is no longer willing or able to be a partner, what is the exit strategy?
  16. If one of the partners is also the renter, how is the rent accounted for?
  17. If you want to do a major renovation or addition to the property, who pays for it and how does it affect the ownership percentages?
  18. Who is going to be on the loan?
  19. Who is going to be on title?
  20. Will the monthly accounting be handled by an individual or professional (i.e. bookkeeper, CPA)
  21. Have you considered an LLC or other official organization?
  22. Can either partner buy each other out? If so, when and how?
  23. Who is responsible for screening and selecting tenants?
  24. What kind of tenants will be approved to rent the property? (i.e. College kids, pets?)
  25. If the tenants don’t pay, who is responsible for the eviction?
  26. Who pays for the evictions, if necessary?
  27. Are all parties willing to put the terms of the sale into a written agreement?
  28. Do any of the parties have a history of poor money management?
  29. Are you willing to communicate your feelings when they are hurt or when you feel misunderstood?
  30. Who is the final decision maker?

 

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