Investor · Mountain View, CA · Member since 2014 · 120 posts · 51 votes
I may have an opportunity to purchase a fourplex with a partner (non-romantic). What we'd like to do is the following:
I make this a point because he will occupy one of the units and I will occupy the other. He's not interested in "running" a rental and wants to pay for his portion in cash, which helps from a mortgage perspective. I'd be the primary on the mortgage and own the rentals. Does anyone have any experience with this and can offer advice? aka, gotchas, etc?
Investor · San Francisco, CA · Member since 2016 · 314 posts · 153 votes
10y
You'll probably want to set it up as either a TIC, Condo, or Co-Op. TICs can use fractional financing or not, as appropriate. If you're seriously going down that path you'll want to talk to a lawyer experienced in setting up those deals to get the right paperwork and CC&Rs in place.
Investor · Los Altos, CA · Member since 2014 · 942 posts · 1k+ votes
10y
Hello @Mimi H., in this case I would look at this more as a business partnership then the opportunity to buy a property. The most overlooked portion of a partnership, business or otherwise, is the end... How do you unravel this property ownership if either of you wants to leave the situation. As a FEW examples: how do you value the individual units so the other person can "buy out" the partner. What happens if the partner decides he needs to get his equity out due to some unforeseen emergency? What happens if either one of you dies in a car crash, does the other person get the entire property? What happens if your partner gets sued for something that is totally outside of your control and they come after the property? What if he stops paying his share of the property taxes or insurance?
At the beginning of a partnership everybody is thinking about the "opportunity" and believe that "nothing bad" or "he would never do that"will rule the relationship forever. But the sad truth is that there are real reason for legal "CYA" strategies.
My point is that there are so many potentially dangerous unforeseen scenarios that could effect the two of you, that having a clear legal document should take priority in your evaluation of this "partnership". Have the clear discussion, prior to making the commitment and make sure everything is documented clearly. That way 20 years from now or 20 days from now, if a difference in memory of details does arise, you will have something to reference.