Real estate co-ownership arrangements are becoming increasingly popular, especially in cities where pricesâ€”even after the real estate meltdownâ€”remain out of reach for many buyers.
“Lending guidelines have become twice as hard to meet because of the housing market,” says Joe Schiller, an associate with Rubloff Real Estate in Chicago. “People just don’t qualify like they used to. But if they get some friends and put money together, they can afford that 20 percent down that you now need to purchase.”
Schiller says that while financing is easier, these arrangements have the capacity to fail. He recommends that people who are considering a joint purchase hire a lawyer to draw up a co-ownership agreement, including a plan to get out of the arrangement.
Here are some other tips for co-buyers:
Before you begin looking for property, decide the geographic and financial ranges for the search.
Understand potential co-buyersâ€™ finances; lenders will look hard at the finances of all partners in the deal.
If the property is a condo, understand the rules regarding rentals, just in case one partner needs to move out.
Put everything in writing, particularly the escape plan.
Source: The Chicago Tribune, Kyra Kyles (10/13/2008)
Bennington VT Real Estate, Buying, First Time Buyers
Reprinted fromÂ REALTORÂ® Magazine OnlineÂ with permission of the NATIONAL ASSOCIATION OF REALTORSÂ®. Copyright 2008. All rights reserved.