Multi-family with my brother?
Hi everyone! Big fan of BP but new to the forums. I am just starting in my career and in my fascination with househacking.
I have a question regarding buying a duplex: Given my circumstances -- should I go in on a deal with my brother?
I know this will already raise some red flags for some, but here's the backstory: we are born and raised in a very expensive area -- the SF Bay Area, and I would like to own something here. Though painfully expensive, I want to put my roots down around here, be near my family, and feed my hopeless addiction to surfing; an addiction I wish I didn't have from a real estate perspective but one that's nonetheless here to stay and, unfortunately, a MAJOR factor in where I choose to live. :)
My brother has been talking about buying his first house in Santa Cruz, CA, where he currently rents, for quite some time. He is self employed, and earns income via his Construction business. I do not know how much he makes per year, but I know he has at least 200k in the bank that he's already planning to use for a down payment. His credit score is around 700.
I am also interested in living in Santa Cruz. I currently rent and do not have any past real estate. I work in the tech industry and have stable income around 99k per year. I have around 35k in the bank and 25k in my 401k which I could potentially leverage. My credit score is around 780.
Given that multifamily homes go for around $1 million -- does this seem like a circumstance in which we could team up and compliment what each of us is bringing to the table financially? If so, how would you go about this deal?
More details:
- Each of us would get one side
- My brother and I get along very well but are realistic that such a big investment could lead to conflict. We are open to devoting a decent amount of money on a lawyer to draft some terms and agreements.
- We are open to each of us renting the other half of the duplex out at any time, or selling (via a TIC?)
- I would rent out the extra rooms on my side if applicable. Not sure if my brother would do the same.
- We're open to 3-unit or 4-unit and renting out the unused parts.
Thanks in advance everyone!
Sam