Buying Property with a Partner

2 Replies

Hello,

Due to the fact of being a bartender for the last several years, and having student loans, my debt to income ratio is quite screwed up, making it near impossible to get a mortgage. For this reason, I'm buying a property with a partner, but we're putting the financing in his name. The property (duplex) is rented, and we're opening a joint bank account once we close. We'll be splitting all the costs and have the rent and bills coming from this joint account. Then we're starting an LLC and moving the house under the company, and save up over a year for the next one. My question is do you think this is a smart idea, and if something goes wrong, will I have any recourse to get my money out of it?

Thanks!

@Jarod Ciehoski This is a great idea and allows you to purchase given your financial situation. You will need to speak with a lawyer who is experienced in real estate partnerships. You always want to think about worst case scenarios that could potentially happen, like one partner needing money out, cash calls, etc.

@Jarod Ciehoski

The first Jarod I have had interaction with that spells Jarod the same....

I have a post up that is a little like your situation. Only mine was a romantic relationship as well. We did the LLC and everything else that you mentioned. Here is the news....

Both of you need to sit down and in details write down what each of your roles are in your investment. The more detailed the better for a lot of reasons. It’s not a easy thing to do between two friends. You should also have penalties for breaching the contract and not following through with the responsibilities for your role. This is not to take advantage! This is a good way to create accountability for your roles in your business! Once you have both agreed to these things then take those documents to a real estate attorney and both of you sit down with that person and explain what you have written down. This eliminates any grey areas for everyone involved. Having everything together and a solid plan for a contract will save you a lot of money hashing things out with your attorney and everything can be done in a couple hours total. At that point you both are accountable and you both are protected. It’s all about the details in the contract.

Good luck on your adventure!