Re: Investment property
I am just throwing around an idea and would like some advice.
My closest friend wants to purchase her first property. She is 34 and has only rented, she is also in debt.
Would it be absolutely crazy for me to consider co-purchasing a condo with her as an investment property for me? What are the legal aspects of co-owning if one wants to sell in 5 years? What if she can't make payments?
Any experts on this topic out there?
I'm no expert but buying property (real estate) with a "friend" is often a good way to end the frinedship.
If you are going to buy an invstment property then go into it with the mindset that it is a business. You can include provisions for how any future sale of the property would be handled in a contract that you draw up with your friend in advance of any purchase. You can stipulate that both must agree to the sale, that one has to buy the other out, etc... (of course, if her credit is bad and she can't qualify for a mortgage on her own now, you should ask yourself if she'll have the ability to buy you out in the future as well...). You'd want to get a lawyer involved in drawing up an agreement that you are both happy with. You'll want your own laywer to represent your interests in doing that.
If she can't make the payments then the most likely case is that they'd come after you for them. It's no different than any other loan where multiple people sign for the loan. If your name is on the mortgage then you are just as responsible for paying back the bank as she is.
The question I'd ask back to you is "What is the payback on your investment?". If she is going to live in th property is she going to pay you a monthly amount for your share? Or are you looking at splitting profit at some future point by selling the property?