When we think about the possibilities of owning real estate property—such as land, house or condominium unit—we often hesitate because of the pending financial difficulties involved. Acquiring such properties takes a lot of money; if you are just starting to save up, it may take years to buy quality real estate. However, taking on a partner to share the cost of buying real estate property could simplify and speed up the process.
Start a partnership with someone you trust and agree with. It may not be a friend or a relative, but finding someone who shares the same vision and goal for the property with you is a step in the right direction.
Draw up a written contract on co-ownership that outlines each partner’s responsibilities and share of the property.
Form a consensus on how key decisions will be made. If the ownership of the property is equally divided, then decisions are most likely to be equal in weight. It is important for you to have a way of breaking decision deadlocks by asking a third party mediator.
Agree on how expenses and mortgage payments are split. Make a list of all the expenses in advance so you have an overview of how much both of you need to contribute at the end of each payment period.
Discuss who will manage the property and how the proceeds will be divided, if you and your partner decide to lease or rent out the property. Come up with percentage splits in proceeds and profits.
Consider and discuss what will happen if one of you leaves or dies. Can you or your partner afford to buy the other partner’s share? Will you both sell and split the sale money between yourselves?
Consult or hire a real estate attorney to help you formalize and iron out legal matters. It is important that all the questions you have about the partnership have been answered and agreed upon before signing any contracts.
