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.
- What kind of property are you planning to purchase? (Home, Apartments, etc…)
- Describe the property (bedrooms, bathrooms, etc…)
- Where are you going to buy the property? (City, Area, etc…)
- How long do you plan to keep the property?
- Who is going to finance the property?
- Who is going to provide the down payment?
- How is the property going to be owned? Is it split evenly?
- Who pays for the repairs?
- Who does the repairs? Handyman? Do it yourself? Professional?
- Who determines how a repair is made and how much will be spent on them?
- Who will handle the accounting and will that person be compensated for it?
- Will you hire a property manager?
- When the property is sold, who keeps the profit?
- What if there is a loss on the property, who has to contribute?
- What if circumstances change and one of the owners is no longer willing or able to be a partner, what is the exit strategy?
- If one of the partners is also the renter, how is the rent accounted for?
- 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?
- Who is going to be on the loan?
- Who is going to be on title?
- Will the monthly accounting be handled by an individual or professional (i.e. bookkeeper, CPA)
- Have you considered an LLC or other official organization?
- Can either partner buy each other out? If so, when and how?
- Who is responsible for screening and selecting tenants?
- What kind of tenants will be approved to rent the property? (i.e. College kids, pets?)
- If the tenants don’t pay, who is responsible for the eviction?
- Who pays for the evictions, if necessary?
- Are all parties willing to put the terms of the sale into a written agreement?
- Do any of the parties have a history of poor money management?
- Are you willing to communicate your feelings when they are hurt or when you feel misunderstood?
- Who is the final decision maker?
Photo by Taylor Young on Unsplash