When it comes to buying a home, many people do so for the intent of living in it. However, considering how hot the real estate market has been, many have also been purchasing homes for investment purposes. If you have a business partner or even just a friend/family member who you have considered investing in property with, it’s best to weigh the pros and the cons of purchasing a home together. There are many benefits to doing this with a partner, but there can also be some cons. If this is something you’ve been pondering, here are the top pros and cons to consider.
Pros:
More Cost Effective
Buying a home is expensive, even if you plan on using it for investment purposes. Having someone to split the downpayment with can ease the overall financial burden by a lot. Many lenders prefer larger down payments, and this will be more doable with a partner. Additionally, you might be able to afford a property that is more valuable and can be more profitable down the road. Additionally, the sooner you can purchase a home, the sooner you can begin to earn home equity.
Split Responsibilities
When using a house for investment purposes, like renting it out, the maintenance aspect of it can be taxing. By having a partner, you can split all of the responsibilities that come alongside this. For example, someone might be better at handling the finances while the other is handier. Splitting the chores and responsibilities will make co-buying a home as an investment much more manageable.
More Flexibility
If you have a partner, then you will have a lot more flexibility in a few different ways. To start, you wouldn’t have to be solely responsible for the down payment or mortgage. You’ll be able to have more flexibility with your spending. Additionally, since you won’t have 100% of the responsibilities, you can move around more and have more free time.
Cons:
Conflicts May Arise
One of the biggest cons that come along with co-buying a home is that if something were to happen that would prevent you from continuing to use the home as an investment, you would have to make some hard decisions. One person might have a different approach to any sudden situation, which can cause rifts. Before signing off on a house together, make sure to have some options for handling any conflict.
Interest Rates Based on Lower Credit Score
Unfortunately, the interest rates of mortgages will be based on the person with the lowest credit score. If you or the person you are co-buying the house with has a low credit score, then your interest rate is likely to be higher. This can make the overall investment a poor one, especially if one of the credit scores is particularly low.
The Bottom Line
There are a lot of factors that go into co-buying a home including responsibilities, interest rates, finances, and more. If you have an equal partner who is willing to split the costs and responsibilities with you. Additionally, communication is key. If you do decide to co-buy a house with someone, be sure to have a constant line of communication so that conflicts don’t arise down the road. Additionally, work with a Tampa Realtor to ensure that you find a property that is going to work well for your situation.