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Buying a Home with Friends: Conversations to Have Beforehand

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Buying a Home with Friends: Conversations to Have Beforehand

Some of them have been around since you were a child. Some you may have found in college. Some may even be in your neighborhood or at work. No, we’re not talking about your sweater collection—though sweater season is in full swing. We’re talking about your friends. You know, the people who you rely on, confide in and maybe even vacation with.

You probably have no reservations about sharing secrets with your friends, but have you ever considered sharing a mortgage with them? It is not uncommon for friends to join forces to take on a second mortgage for a vacation home or investment property. It seems like a no-brainer, right? You’ve already vowed to be friends forever. A 15-or-30-year mortgage should be no problem

However, even the most maintenance-free friendships can face some tough times when it comes to sharing a home purchase. That is unless both parties are prepared for what co-ownership may bring. If you’re considering buying a second home with a friend, here are three major conversations you must have first.

How will you split the costs?


Unless you and a friend are planning to pay for a second home with cash, you’ll both be responsible for making monthly mortgage payments on the property. And, no, splitting a mortgage is not like splitting the bill for a night out. Having a conversation about fees like the down payment, closing costs and monthly mortgage payment is crucial before you even begin to consider looking at homes together.


While you’re chatting, don’t forget to include other monthly home-ownership fees like utilities, regular maintenance, homeowner association dues or other services. It is also important to bring up potential scenarios like plumbing issues, roof leaks or other home damage. How will you split all of the certain costs that come along with owning a home?

What will happen if someone is unable to hold up their end of the deal or wants to get out of the mortgage?


Any conversation about the potential costs of owning a second home must be accompanied by a conversation about what will happen in the event that one or both parties is unable to make their payments or wants to leave the agreement altogether. Though this conversation may not be as fun as reminiscing about your old college antics, it is a must-have talk before you can confidently enter a home purchase with a friend.
With all the excitement of potentially owning a vacation home or investment property, who wants to get mired down by thinking about the negative aspects of sharing a mortgage? Hard times happen for everyone. Before they happen in your blissful home-buying experience, have a plan. Will one person take over the entire mortgage payment? Will you be forced to sell the property? Make sure you consider the “what ifs” before you and your friend are forced into an uncomfortable situation.

How will you use your new property?


Once you get the tougher financial conversations out of the way, you can begin to consider the possibilities of what it will be like to own a second home with your friend. If you’re planning to purchase the home as a vacation property, you’ll need to decide if you’re going to split time there, vacation together or rent it out on a seasonal basis.
If you and a friend are looking to buy a second home as an investment property (or if you’re planning to rent out that vacation home), you’ll need to draft a rental agreement, plus decide how you’ll deal with tenants and their issues. You’ll also need to map out a plan for marketing and maintaining your property so that it continues to be a worthwhile investment.

Are you prepared to have a few tough financial conversations with a friend? Are you also prepared to face a few certain disagreements along the way to happy home-ownership? If you confidently answered “yes,” you—and your friendship—may be ready to stand the test of owning a second home together!

Have questions about embarking on a new real estate journey with a friend? Please reach out. We are here and happy to help you navigate these options!