As interest rates trend up and affordability stays low, making an individual, single income purchase can be a stretch. But did you know that there’s another option that means you could get into the market sooner without waiting to put a ring on it?
Co-buying simply means to purchase a property with a person who is not your spouse. This can be as simple as purchasing a home with a good friend, with whom you will share the space as a primary residence. Or, for savvy investors it can mean purchasing a rental property, generating cash flow and reaping the financial benefits of appreciation.
There are two types of joint ownership: joint tenancy, and tenants-in-common. A joint tenancy agreement is the most common when purchasing a home with a partner or spouse for a few reasons; namely that both owners hold full ownership rights and each has an equal and undivided right to keep or sell the property.
In a tenants-in-common ownership, on the other hand, the share of ownership depends on what each partner contributes to the purchase and what is mutually agreed upon. The value of each owner’s share will vary depending on income, share of down payment, or amount of credit qualification they bring to the deal. It will also determine what share of the proceeds go to each owner at the time of sale. This is why it is incredibly important to have a formal agreement between buyers drafted before purchase outlining each owner’s contributions, responsibilities of ownership, exit strategies and future plans.--
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