By Christopher Solomon
Four years ago, Josh Tackitt of Portland, Ore., had grown weary of living in crowded rental houses and started looking for his own place. So did a very good friend of his.
They did the math and concluded that combining their rental checks could amount to a decent mortgage payment. "We both realized that for what we both would be paying for our own places ... it would work out that that's what we could get a mortgage for," says Tackitt, who's now 30.
They took a home-buying course and eventually bought a small (just under 1,000-square-foot), two-bedroom house for $189,000. "We found ourselves a house that would work, with a downstairs finished basement," Tackitt recalls. "I could have my own space down there, and she could have her own space upstairs."
Simin Marefat, 34, and her good friend, both nurses with stable jobs in the pricey San Francisco Bay Area, came to a similar conclusion: They could get more if they pooled their resources. After a year of hard searching, they bought a three-bedroom home for about $730,000.
"Both of our parents were against this," Marefat says, but adds, "It's been three years this last month, and I think overall it was a great decision, and I think Tanja feels the same."
Who says you can't mix money and friendships? The truth is, joint home ownership can be a huge success - or a spectacular failure. The trick is in figuring out if it's right for you - and then making sure you go about it the right way. To help with both tasks, here's some advice from real-estate experts, attorneys and those who've been there before.
First things first
"The first rule that everyone's going to say is make sure you have an ironclad agreement. Before that, I emphasize that it is not the written agreement but the people you are dealing with that will determine whether it proves to be a harmonious arrangement," says Gary Eldred, author of "The 106 Common Mistakes Homebuyers Make (and How to Avoid Them)." "Don't count on a contract to compensate for someone who you can't rely on."
The lesson: Know whom you're going into business with. Think carefully about this would-be partner: Is he or she the kind of friend who argues about the bill after dinner, or the kind who orders a bunch of food and then says, "Let's just split it"?
In a way, Portland homeowner Tackitt had been doing his due diligence on his friend for a long time. "When we bought the house, we had already lived together for about three years. So it wasn't a random friend. It was someone I had lived with, I had shared financial responsibility with, I had been on three different leases with," he says. "I knew her family, I knew her parents." He knew, too, that she was smart with money.
Put on your investor's hat
Just as you need to view your friend as a business partner, "You have to view from the beginning the entire venture as a business venture, and whatever you buy as an investment," advises Julie Panaro, a commercial real-estate attorney in Delaware who's involved with the American Bar Association's real property trust and estates division.
