While purchasing property with a family member can certainly be advantageous, it is a significant long-term commitment. Therefore, there’s a lot to consider before heading to the market together. 

Whether you’re looking for a shared space to call home or are aiming to make a strategic real estate investment together, open and clear communication will be absolutely essential before, during, and following your purchase.

In this blog post, we’ll cover five things you should consider before purchasing real estate with a family member.

Looking to buy an income-generating investment property? Click here for tips on optimizing your bottom line by taking on management duties yourself

Your Long Term Goals

Owning real estate is a substantial commitment, both financially and from a lifestyle perspective. While you and your family member may see eye-to-eye today, it’s imperative to think long term with this kind of purchase.

Before proceeding with a joint purchase, take time to discuss your long term goals and how they may relate to a shared home or investment. Consider how a shared property will fit into your future plans from a personal perspective. For instance, will this investment complement (or complicate) future family growth or your plans for retirement? 

If your family member envisions using the property differently or has conflicting lifestyle preferences, it’s essential to address these differences before making a commitment. 

Compromises & Exit Strategies

Change is a natural part of life. Given the substantial nature of a real estate investment, it’s important that you and your co-buyer have similar long term goals. That said, if there are foreseen differences in your plans, it is possible to anticipate and account for certain changes long term. 

As an example, if one person anticipates the desire to sell their portion of the property in ten years, creating a plan in advance can reduce headaches or disagreements. If needed, the co-buyer can work towards accruing the funds needed to buy out their share when the time comes.  

Looking to purchase property in Toronto? Explore these related posts for helpful anecdotes and insights. 

Financial Resources & Contributions 

While sharing the financial burden can be advantageous, it’s vital to ensure that both parties are financially capable of meeting their commitments. With that in mind, there are several financial details to sort out before proceeding with a purchase. 

Consider how financial responsibilities will be divided if one buyer has more resources than the other. Will fiscal contributions be equal, or will they be based on each buyer’s individual financial capabilities?

Beyond determining how much each co-buyer will contribute to the property itself (and associated buying costs) you will need to establish a financial structure for the various ongoing costs of ownership. These expenses include but are not limited to property taxes, value-adding renovations or upgrades, maintenance, utilities, and more. 

Investment & Property Management Experience 

In Toronto, it is not uncommon for real estate investors to purchase dedicated income properties with another person. This co-buyer could be a formal business partner or a family member. 

That said, buying a dedicated income property is more than just a real estate purchase, it’s also a business venture. Therefore, if you are considering this type of purchase, it is critical to consider both parties’ collective experience (if any) with owning and managing an investment property. 

If one of you has relevant experience, it can be a significant advantage. However, it’s not essential. That said, before proceeding with a shared investment, you will need to consider and divide the various responsibilities that come with it. 

These duties include property management, financial planning, marketing, tenant sourcing and communication, maintenance, repairs and more. Ensure that responsibilities are clearly outlined and agreed upon to minimize misunderstandings and disputes.

In Toronto’s competitive market, crafting a strong offer will be a critical component of your success as a buyer. Click here to learn more

Buying With Ramsay Group

Partnering with an experienced buying agent allows you – along with your co-buyer – to maximize your opportunity for success. 

It’s our goal to match you with the right property in the shortest amount of time while getting you the best value for your dollar. Leveraging our deep expertise and data-informed approach to buying real estate, we’ll educate you toward a confident, informed decision. 

For real estate investors, our 20-plus years of direct experience in property and tenant management is invaluable. After finding a high-potential property, we’ll provide you with the right education and tools to be a self-sufficient investor and landlord, without the help of expensive property management companies.

In addition to our powerful buying strategies, we’re also savvy mediators who can guide you through a joint purchase with minimal stress. 

Ready to find the perfect home or investment property? Ramsay Group is your ticket to a successful home purchase. Click here to contact us by email or call 416.906.8366 to begin your bespoke buying journey.

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