Read This Before Buying a Vacation Home with Friends
Purchasing a vacation home is on many people's to do list, but the hefty price tag for a beachfront property or a mountain retreat can make it only a pipe dream. Increasingly, buyers are teaming up with friends to share the cost and the expenses associated with owning a vacation home.
Buddying up sounds great on paper, but buying a vacation property with friends can be perilous. After all, if things don't go well, it could spell the end of a friendship. Not to mention you could end up in a legal fight over the property. Before you even approach your friend or friends about going in on a second home, you have to first understand what you are giving up and getting by not being the sole owner.Compromises Are a Part of the Process
Splitting the mortgage is an appealing idea, but when people team up to own a property, they have to be willing to compromise. Not everyone shares the same taste in the kind of home, decorations and even the location, and so you will have to reach an understanding on what all the parties are looking for in a home. The last thing everyone wants to do is waste time looking at properties without first agreeing on what they want.
The use of the vacation home or property has to be something that is considered upfront as well. It's very easy to assume everyone is on the same page, but without having a conversation about it, no one will know for sure. For instance, you have to figure out if members of the group want to use it year round or if they want to generate income by making it a rental property. Determining who gets to use it when and for how long ahead of time will go a long way in preventing fights after the purchase is complete.What Happens If Someone Wants Out
Life happens, and everyone can go into the purchase of the property with the full intent to hold onto it forever, but forever is a long time and that may not always be the end result. Before you purchase a property with friends , you have to think about what happens if one or more of the buying group decides they want out of the investment. An upfront discussion about how long everyone wants to be onboard and what happens if someone would like to sell is a necessity. Giving the other partners right of first refusal if one party wants to sell is a way to reduce conflict. You also have to think about if you could afford to buy out a partner or if you could cover the extra mortgage and maintenance costs in the event someone wants out.Staying On Top Of Maintenance, Scheduling
Friends like to spend time together, but there will be instances when schedules don't mesh or some alone time is wanted. That is where organizational skills will come in. If you buy a property with friends, you will have to plan who gets to use it when and how the upkeep and maintenance will be doled out. Not to mention who is going to pay the expenses each month. Owning a vacation home will require planning and someone to stay on top of all the scheduling in order to keep the property conflict free.The Bottom Line
Going in with friends to purchase a vacation home is a great way to lower costs. But before you start house shopping, all parties must agree about a lot of things upfront. From the kind of vacation home to who is going to clean it, there are many considerations you have to take into account before buying a vacation property.