Some of us who had roommates in college swore we'd never do it again. Then again, living alone can get lonely and expensive. Collective homeownership comes to the rescue.
It's more than just investing in something; people who are collectively buying homes together are sharing their investment–everyone under the same roof. It may seem odd for adults who are not in intimate relationships to be collaborating on such large investments but in this economy, it's becoming a viable and sensible option.
Mortgage rates are still very low, housing prices have dropped, , and rent is going up. Those who are opting for collective homeownership see it like this: if we can live together in a rental, why not own it? Collectively buying a property can open up many more opportunities, because if you have, say, four qualified people on the loan, you can borrow so much more.
However, the upside doesn't come without a downside, or, at least, a let's-be-cautious side. Just like in a business, collectively owning property means greater income to afford more but it also means more issues to handle. If it's two couples collectively buying the home, you have to be prepared for having something go wrong like a divorce. Also, you have to understand exactly who is responsible for which areas of the home and property. There must be complete understanding of each other's finances and ability to pay. You have to be prepared to address the point in time when someone wants to sell or someone dies.
Then there's the social side of the collective homeownership. Will you really live all under one roof or will you search for a property that has another unit on the property or attached like a duplex? This situation, at least, gives a little more privacy. Another vital consideration is how this will affect your long-term relationship. Yes, it's like moving in with your significant other, but times three or however many are in on the collective homeownership.
For some people, owning a home has become so out of reach that the collective homeownership may be the only viable solution. But it's important to think this through very carefully.
Be sure to have an attorney draft up an agreement. When you go into business with a partner, you must have some legal guidelines that include what happens when it ends–the professional relationship or the business. The same is true with collective homeownership. Don't think just because you're such great friends today, that there won't come a time when you need or want to part.
The more clearly the details of the agreement are spelled out, the less you have to argue over or, worse, take legal action, in the future. But before you even get to this phase, do the math. Study the market. Get expert help from an experienced real estate agent. Spend a lot of time talking about what you want in a home, your vision, and where you want to live with your potential new housemates. Creating a mutual understanding and having a whole lot of patience, tolerance, compatibility, and a compromising spirit will go a long way to having harmony in collective homeownership.
Published: November 9, 2012
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