01-26-2013 06:38 AM - edited 01-26-2013 06:43 AM
You can certainly do this but you definitely need a written agreement and there are many things you need to consider. What happens if one of you eventually wants to sell? Does one person buy out the other? What happens if one of you dies or becomes incapacitated? Will you put in equal amounts of money? You'll need to get an appraiser if one of you wants to get out. And what if the property goes DOWN in value, instead of up? (Buyers still seem to be suffering from "house values never go down" syndrome, despite the past several years.) What if one of you wants to improve the property in some way but the other doesn't? What if you both agree on renovations but one wants to do high-end improvements and the other does not? How do you apportion (and pay for) the improvements? What if one of you doesn't have the money to pay for improvements? You can own the property as "tenants in common" or "joint tenants with rights of survivorship" but you will need a lawyer to explain the differences to you. This all matters because the deed will describe the type of ownership. I know people who have done this successfully but you really need to consider all the possible problems (and deal with them in advance) because property disputes have a way of getting very ugly, very quickly. And litigation will cost you more than you ever dreamed possible. Obviously, the person who said "Great idea" is a realtor because it is NOT necessarily a great idea. Realtors still suffer from "real estate is always a great investment" realtor-speak delusion. And it isn't, especially when things get complicated, never mind trying to figure out whether it's worth it to buy in today's market. What if interest rates go up in a year or two as the economy improves and the government stops subsidizing low rates, so house prices go down? Do you still really want to buy under those circumstances if you don't intend to live in this property?