Purchasing a vacation home is on many people’s to-do lists, but the hefty price tag for a beachfront property or a mountain retreat can make the dream a pipe dream. Increasingly, buyers are teaming up with friends to share the cost and the expenses associated with owning a vacation home.
Buddying up sounds great on paper, but buying a vacation property with friends is fraught with peril. After all, if things don’t go well, it could spell the end of a friendship. You could also end up doing legal battle over the property. Before you even approach your friend or friends about going in on a second home, you have to first understand what you are giving up and what you're gaining by not being the sole owner.
Compromise Is Part of the Process
Splitting the mortgage is an appealing idea, but when people team up to own a property, they have to be willing to compromise. Not everyone shares the same taste in the kind of home, interior design, and even location, and so you will have to reach an understanding of what all the parties are looking for in a home. The last thing everyone wants to do is waste time looking at properties without first agreeing on what they want.
The use of the vacation home or property has to be something that is considered upfront as well. It’s very easy to assume that everyone is on the same page, but without having a conversation about it, no one will know for sure. For instance, you have to figure out if members of the group want to use it year-round or if they want to generate income by making it a rental property. Determining who gets to use it when, and for how long, ahead of time will go a long way in preventing fights after the purchase is complete.
What Happens If Someone Wants Out
Many can go into the purchase of the property with the full intent of holding onto it forever, but forever is a long time, and eternal ownership may not always be the end result. Before you purchase a property with friends, you should think about what happens if one or more of the buying group decides that they want out of the investment. An upfront discussion about how long everyone wants to be on board, and what happens if someone would like to sell, is a necessity. Giving the other partners the right of first refusal if one party wants to sell is a way to reduce conflict. You also have to think about whether you'd be able to afford to buy out a partner, or cover the extra mortgage and maintenance costs in the event someone wants out.
Staying On Top Of Maintenance, Scheduling
Friends like to spend time together, but there will be instances when schedules don’t mesh or some alone time is wanted. That is where organizational skills will come in. If you buy a property with friends, you will have to plan who gets to use it when, and how the upkeep and maintenance will be apportioned. Not to mention – who is going to pay the expenses each month. Owning a vacation home will require planning, as well as someone to stay on top of all the scheduling, in order to keep the property conflict-free.
The Bottom Line
Going in with friends to purchase a vacation home is a great way to lower costs. Still, before you start house shopping, all parties must agree on many things upfront. From the kind of vacation home to who is going to clean it, there are many considerations you have to take into account before jointly buying a vacation property.