STATEN ISLAND, N.Y. – With Staten Island housing inventory low and prices going up, some people may be deciding to partner with friends and buy a home in the borough. This scenario allows people who otherwise would not be able to afford a house to share expenses and achieve the dream of becoming homeowners.
But how do you know if buying property jointly is the right move for you? It is important to remember that this is a business transaction, so you and your friends will have to approach it as such.
“You are going to have to have a very open, very frank conversation with your friends about their finances, their plans for the future, what to do if someone wants to sell, and more,” said Sandy Krueger, CEO of the Staten Island Board of Realtors (SIBOR). “If these are conversations you are uncomfortable having or you are worried about the effect they might have on your friendship, then buying a home with friends is probably not the right choice for you.”
However, if you and your friends can come to terms, owning a home while sharing the burden of all the costs can help you build your savings while gaining equity in a home.
Here are some tips for Staten Island home buyers from SIBOR on purchasing a home with friends:
1) REVIEW YOUR FRIENDS’ FINANCES
“This is most likely the largest financial decision of your life, so now is not the time to hem and haw on questions of finance,” Krueger said.
You will need to be aware of everyone’s credit scores, income, savings and any other relevant assets. It is important to make sure that you and your friends are financially prepared to become homeowners.
2) DECIDE HOW PAYMENTS AND COSTS WILL BE SPLIT
Questions to consider are how much each person will contribute to the down payment and if that will affect how you and your friends divide the mortgage payments? Will the utilities be split evenly every month or will you alternate who pays? It is important that these details be worked out and understood by everyone involved before the home is purchased.
3) DECIDE ON THE TYPE OF HOUSE
Are you planning on buying a single-family home or a multi-family home?
“Do you see yourself sharing a kitchen and bathroom, or are you looking to buy a place where you will each have your own private residence?” Krueger asks.
You should also decide ahead of time on everyone’s must-haves for the home.
“Knowing that your friend will only buy a house with a big backyard or that they will not buy a house on a corner lot can save you a lot of time house hunting,” Krueger said.
4) GET EVERYTHING IN WRITING
It is important that all of the co-purchasers keep written documentation of all of your agreements regarding financial and other responsibilities.
“So many people think that because they are dealing with friends that there is no need to write up a contract, but it can help you to avoid conflicts and surprises down the road,” Krueger said.
5) WORK WITH A REALTOR®
“Buying a home is an important decision, and whether you are doing it on your own or with a friend, using a Realtor® is a smart move,” Krueger said.
A Realtor®, a member of the Staten Island Board of Realtors (SIBOR) and the National Association of Realtors®, can provide counsel, discuss listings, show you homes in person, negotiate on your behalf and help you stay focused on the issues that are most important.
If you enter the arrangement educated and prepared, co-purchasing a home can be a great way to get your foot on the first step of the homeownership ladder.
About The Staten Island Board of REALTORS® (SIBOR)
Marking its 100th anniversary in October 2015, the Staten Island Board of REALTORS® (SIBOR) is the largest not-for-profit professional and trade association in Staten Island, N.Y.
SIBOR exists to enhance the ability and opportunity of its members to conduct their business successfully and ethically; and to promote the preservation of the public’s right to own, transfer and use real property.
Comprised of approximately 1,800 members, SIBOR serves real estate agents, brokers and affiliated professionals throughout the borough and surrounding areas.
SIBOR is the provider of the Staten Island Multiple Listing Service Inc. (SIMLS), which works as a clearinghouse through which more than 250 local real estate firms exchange information on properties they have listed for sale. Together, its members participate in over 3,000 real estate transactions every year.
All SIBOR members belong to the New York State Association of REALTORS® (NYSAR) and the National Association of REALTORS® (NAR).
SIBOR may be reached at 718-928-3220 and viewed online at www.SIBOR.com. SIBOR may also be visited on Facebook at “Staten Island Board of Realtors” and “SIBOR 100” (showcasing some of the organization’s latest highlights and accomplishments), and on Twitter via @SIBOR.