How to co-purchase a property: a step-by-step guide

STEP 1: Identify your co-purchaser(s)

Your co-purchaser will be your business partner in joint homeownership. If you also live in the property together, they'll be your neighbor or even roommate, too. You may already live with your co-purchaser, particularly if you're in an unmarried life partnership -- in which case the decision is easy. Otherwise, you'll want to think about which friends or family will share your goals in property ownership. This will start to shape your vision for what you'd like to co-buy. Maybe it's a multi-family home with two units, one for each of you, or maybe it's a mixed-use property with a commercial space from which you'd like to generate income. 

It's wise to think about which friends or family you feel comfortable making major decisions with, too. 

STEP 2: Plan your finances and the legal structure for your property co-ownership [engaging Consociatim to help you discuss and create the necessary documentation]

In order to make a timely offer on a property, you'll need to be pre-approved for a mortgage. To be pre-approved for a mortgage, you'll need to have made and documented decisions on how you'll co-own and, if relevant, cohabitate. Briefly, you'll want to:

1. Review credit scores, income, debts, cash for down payments with your co-purchaser(s). This open understanding of each other's personal finances is the first step to figuring out the right way to structure your co-ownership.

2. Decide on how you'll take title to your future property.

   • Joint Tenancy: This format is appropriate for equal ownership shares, and it provides the "right of survivorship," meaning a deceased owner's share automatically passes to the other owner(s).

   • Tenancy in Common: This format allows for custom ownership percentages and allows each owner to name a beneficiary for their share in a will.

   • LLC: This format allows for unequal percentages and is a good vehicle if you're thinking of purchasing more than one property together.

3. Create a co-ownership agreement or LLC operating agreement to document how you'll handle expenses, revenues (if applicable) and make decisions in a range of scenarios. You should draft the co-ownership agreement before finding and closing on the property, so that you work out the process, requirements and expectations of your co-buyer relationship in advance. The specifics of the property that you purchase can then be plugged into the agreement easily once the closing occurs.

Consociatim is a critical resource for #3, and you can choose to bring us in to facilitate your decision on #2 as well. Go back to the homepage to learn more about how we work and how you can get started with us.

STEP 3: Get pre-approved for a mortgage

Fortunately, in Step 2, you and your co-buyer(s) will have gathered most of what a lender will ask for to get pre-approved for a mortgage. You'll want to compare rates available from a range of financial institutions to find the best terms for your specific scenario.

STEP 4: Find the right property and make an offer on it

Here, you'll want to work with a real estate agent who can help you access properties that fit your profile (for example, you might be looking for multi-family fixer-uppers) and are in your desired geography and budget. A great agent can help you strategize your approaches to offering and negotiating. In select geographies, Consociatim has relationships with excellent agents, and we'd be happy to make introductions. We make no kickbacks; we're just looking to connect you to the right resources.

STEP 5: Close the deal

Once your offer is accepted, you'll go through underwriting with the lender you've chosen, which may involve many steps like a property inspection, as they're looking to ensure that they're lending towards a solid transaction. You'll also need a real estate attorney to help you review and negotiate the contract, and to guide you through the actual closing process, which is frankly obscure and filled with paperwork. Consociatim also has relationships with trustworthy and reasonably priced attorneys, to whom we'd be happy to introduce you.