5 Tips For Buying Property With Friends Or Relatives
By Vayle Hammond

Finding yourself worse off than you could have anticipated is a tough blow, especially when coupled with unexpected hardships such as job loss, separation or divorce, or suddenly being widowed, so you may feel you are facing a future of uncertainty.
 
Buying a property by yourself is expensive, so why not recruit a close friend or relative and make that journey together?
 
1. Understand the shared financial commitment
Buying a property is a big financial commitment, not only because of the ongoing monthly repayments, but also the responsibility for the regular expenses involved in running and maintaining the property. A decision should not be based in emotion but in cold hard numbers. Don’t let your feelings for the person cloud your thinking. Agree to get independent professional advice from lawyers, accountants and real estate agents whenever necessary.
 
2. Be honest about money
Being as honest and open as possible about each of your own expenses, spending, savings and debts is crucial. You both need a true picture of each of your financial strengths and weaknesses. Discuss what your current budgets are and how they will have to change to manage the new expenses you will both be committing to. Agreeing to get credit checks, reviewing each other’s tax returns for the past few years and looking at each other’s current income and expenses is a sensible approach that informs both of you - to ensure neither of you is getting in over their head.
 
3. Decide on clear terms of co-ownership
There are a couple of options to choose from in terms of the ownership structure. ‘Tenants in Common’ gives each party a share in the ownership of the property, while ‘Joint Tenants’ means the two of you together own the property as one entity, without individual shares or rights of ownership. There are great advantages to buying properties with a friend or relative, as long as you both approach it sensibly. Once you have chosen the most suitable co-ownership structure for you both, you should get a co-ownership agreement drawn up by a professional. 
 
4. Invest in legal advice
Getting an expert to advise you may cost a few hundred dollars or so each and that process will be well worth it in the long run, especially if things fall apart. A real estate lawyer can draw up a co-ownership agreement that covers everything as the detail of who does what with regard to management of the property, budgeting for ongoing expenses and necessary precautionary measures to protect you both in the long term.
 
5. Put management structures in place
The co-ownership agreement can also outline all the other points agreed upon, such as division of expenses (like cleaning and maintenance of the property, rates, utilities etc.), agreement on direct debits for regular payments such as the mortgage, and division of management tasks like who will take care of the garden? Who will go to the body corporate meetings if relevant? Or who co-ordinates tradesmen for example so the property is regularly maintained, and everything’s kept in good working order. All of these ‘jobs’ need to be considered and allocated in advance to avoid confusions and resentment in the future.
 
First National Real Estate offers all manner of resources to help you understand the property buying process. Visit www.firstnational.co.nz for free advice today.