The Buddy System



Today's real estate prices are making it hard enough to purchase property with two salaries, let alone one. So how does a single person buy into today's market? In many cases, it's by partnering with a friend or relative.


The first step in entering into what is likely the largest purchase of your life is to sit down with your co-buyer and have a completely honest discussion — no holds barred — about each of your wants and needs, your expectations, and your finances. You can even draft up a list of questions together, then go your separate ways to complete the "survey" before getting back together to compare answers.


Here are some questions you may want to start with:

House or condo, and why?
Ideal locations and amenities (Parking? Dog parks? Bike paths? Shopping? Public transportation?) that are most important to each of you.
Expected size, from an idea of footage to number of bedrooms and bathrooms.
What are each of your short-term versus long-term goals? Are you thinking of this property as an investment only, to be flipped after a set period of time? A short-term housing solution until you can afford your own dwelling?
Even things that seem like details, but that can cause misunderstandings later are questions like, "Are you a do-it-yourselfer who expects to tackle the home maintenance tasks yourself, or someone who prefers to pay a professional to deal with all repairs and home upgrades?" "How are we going to divide chores?" "What happens if one of us loses our job or becomes ill — should we buy insurance to cover the mortgage payments?"

The financial end of the agreement is a whole separate conversation, which starts with a completely honest disclosure of each of your salaries, credit scores, current debts and financial obligations. From there, make sure you agree on financial points that would include:
Expected price point of the property.
Amount each of you has to put as a down payment.
Understanding of lawyer's fees and closing costs.
Agreement on if you'll be splitting the cost of the mortgage and expenses 50/50, or if there's another ratio you'll be following.
Confirmation of maximum budget requirements per month.
A review of the expected costs of running a home, from the costs of buying the property (closing costs, legal fees, etc.) to property taxes, utilities and maintenance.
When the day comes that one of you wants to pull out of the agreement, you'll need to talk about how to agree upon a fair ownership split, and the right of first refusal from the remaining owner.

These points are just a start. Make time to meet with both your mortgage representative and real estate representative, and be prepared to ask lots of questions and take lots of notes. Get pre-approved for a mortgage so you know exactly what you can afford, and meet with a lawyer to draft up a cohabitation agreement to clarify the type of agreement you have, complete with financial obligations.

Now the fun part — it's time to ask your real estate representative to set up home viewings, knowing exactly what features will make both you and your property partner happy!