Should You Buy Property With Family?

Scanning articles on the internet, this one caught my eye,'Investing in real estate within the family,' byGlink & Samuel Tamkin Real Estate Matters, Tribune Media Services.  Many folks are wondering if it is a good time to buy real estate and whether or not investing with family members is a good idea. 
As a parent of a young adult, a college student and a high school student, I often wonder about helping them invest in real estate. When my oldest went to college, I began looking at property to buy near the university, thinking that it would be a good investment. She quickly put the kabosh on that plan--she wanted to live where her friends lived and wanted to maintain flexibility to move if the location wasn't working out.
Now that she is moving into her first post-graduation apartment, I have again begun thinking about how and when she will be able to buy and whether or not, we would want to be involved.
As the article mentions, it is important to consider whether helping a family member buy a property would be done as a gift or as a co-investment.  Consideration should be given as to how the title will be held; are you buying the house so your son/daughter/brother/father/mother can live there, but you own it? Are you buying it for them and giving them all future control? Do you want to own it jointly and make decisions about the property together?
Once you have decided how the ownership should be structured, do yourself a favor and hire an attorney to draft the agreement and have all parties sign.  Many families have been shattered by misunderstandings and misbehavior when it comes to property and money. Don't let your generosity inadvertently tear your family apart. While that may sound melodramatic, I have seen it happen.
If you do decide to buy property with a family member, the most important consideration--beyond the purchase negotiations--is how the property will be maintained or improved and who is responsible for making (and paying for) these items.
Buying real estate with a family member can be a great endeavor, but make sure that you plan accordingly so that everyone understands the parameters. This will insure that feelings and finances are not hurt later on!

 

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Comment balloon 3 commentsHolly Weatherwax • November 18 2012 11:41AM

Comments

Your intentions sound like those of many parents of the 'echo boom' generation.  Important to get their say so on the matter and glad that your daughter spoke up before you invested :)

Posted by Jana Holmstrup (Jana Holmstrup - CEO - Kings Mortgage Services, Inc.) almost 6 years ago

I have done this three time with my kids and it i lots of fun and learning to do.

Posted by Charles Stallions Real Estate Services, Buyers Agent 800-309-3414 Pace and Gulf Breeze,Fl. (Charles Stallions Real Estate Services Inc) over 5 years ago

Holly - I also wrote a blog about buying real estate with parents. It's here if you like to read it. - Dana

Posted by Dana Hollish Hill, Lead Associate Broker (Hollish Hill Group, Keller William Capital Properties) almost 4 years ago

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