Real Estate Investing With Your Spouse

Real Estate Investing With Your Spouse

Phoenix, AZ · Member since 2020 · 3 posts · 1 vote

Hey everyone! I am new to the real estate investing community and I am still learning so much as I embark on this new journey. I had a question regarding a sensitive subject and wanted to get the opinions of others in the community.

As a young man (23) who has just graduated from college and started working his first “real” job, I have very little savings, and don’t make a lot of money. I have started reading real estate investing books and have been binge listening to the bigger pockets podcast and got hooked on the idea of house hacking. I am currently saving money for the down payment on my first property and had a question about investing with your spouse. I am wondering if it would be a bad idea to split the down payment with my girlfriend to come up with the down payment quicker so we can finally start getting our feet wet in real estate investing. I do plan on being with my girlfriend for as long as possible, but I know that things can always potentially go south. Not trying to be negative, but I want to plan for contingencies and was wondering how it would work if we were to go into an investment together and the potential consequences of doing so. Thanks so much for the insight!

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  • Real Estate Attorney & Investor · Greater NYC Area · Member since 2016 · 70 posts · 48 votes
    6y

    Things to consider - Are you entering into the deed as joint tenants, or tenants in common? You both have to be on the deed and the mortgage, which means that if you break up you will need to refinance and one of you will have to buy the other one out, but who's going to be bought out and what will be the basis for the price you agree on? 

    You better enter into a Tenancy-In-Common agreement, or some other form of side agreement whereby you agree in writing to establish the terms of your business arrangement NOW (i.e., valuation based on 3% per annum increases in value over ARV, or based on appraisal of a reasonably agreed upon appraisal company with a solid reputation, etc.). As for property management and expenses, are you sharing in the down side of the investment and the responsibilities? You better have an agreed upon method for arbitrating potential disagreements and allocating the responsibilities and obligations between you.

    Write out the list of items and enter into a written legal agreement like you would with any other business partner, because this is still a business agreement, first and foremost. Your girlfriend will either appreciate your professionalism and your understanding of the weight of this proposal for your economic futures and your relationship, or she'll be insulted that you feel she needs to enter into a full agreement for every aspect of this investment deal. If it's the latter, then you will know that this deal should go no further.

     My wife has membership interests in some of my deals, but I retain sole management rights. It's the only way it would work for us. It also forces me to make good investments, because the only thing worse than losing money, is having someone remind you about it every day of your life. I wish you luck, man. You're a braver man than I am. 

  • Phoenix, AZ · Member since 2020 · 3 posts · 1 vote
    6y

    @Jon C. Thank you I appreciate the insight! Probably best to just go in on the property by myself 😂

  • Portland, OR · Member since 2020 · 9 posts · 3 votes
    6y

    Hi Taylor! I'm also new to the real estate investor community. HOWEVER, I consider myself more experienced with personal finances.

    While he can be controversial, Dave Ramsey helped me pay down $227 K in personal debt (mostly student loans). So, this isn't my advice, this is his advice: https://www.youtube.com/watch?v=mH4voiVbCN8

    Hope this is helpful!

  • Phoenix, AZ · Member since 2020 · 3 posts · 1 vote
    6y

    @Blair Holbrook that video is very helpful, gotta love Dave Ramsay’s straightforwardness haha. Thank you!

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