Buying a Home with Friends: What Could Go Wrong? (And Why It’s Still Worth It)
Many people on the Open House Team have purchased property together!
At Open House Austin, we believe in breaking down barriers to homeownership and fostering community in creative ways. One trend we’ve seen gain popularity, especially in cities like Austin, is the idea of buying a house with friends. It can seem like the perfect solution to rising home prices and the desire to build wealth, but let’s be real—it’s not always smooth sailing.
Here’s what could go wrong when you buy a home with friends, and why, in the end, it might still be the right decision.
1. Conflicting Expectations
Before you even start house hunting, it’s crucial to have an honest conversation with your friends about what you want from this shared investment. Do you want a fixer-upper or a move-in ready home? Are you all willing to pitch in for repairs and renovations, or does someone want a turn-key situation?
Without clear expectations, resentment can easily build. One person might be frustrated they’re doing all the yard work while another is just enjoying the space. Setting boundaries and clearly defined roles from the start will help avoid this pitfall.
2. Different Financial Goals
Each person involved in the home purchase may have different financial priorities. One friend might be looking to flip the property for a quick return, while another sees it as a long-term investment. Without a shared financial vision, you could find yourselves in a sticky situation down the line when one person wants to sell, but the others want to hold onto the house.
3. Uneven Financial Contributions
It’s possible one friend can contribute more to the down payment or mortgage than the others. While this can work out, it can also create feelings of imbalance or entitlement. Who gets the master bedroom? Who decides how the money is spent on upgrades?
Creating a legal agreement that outlines each person’s contribution and ownership stake in the house is critical. This way, everyone is on the same page, and any future disagreements can be managed fairly.
4. The “Life Happens” Factor
People’s lives change—sometimes unexpectedly. One friend might get a job in a new city, fall in love and want to move in with their partner, or simply decide they want out. What happens then?
Having a plan for what happens if someone wants to sell their share is key. Agreeing in advance on how that process will work, whether someone else buys them out or the house is sold entirely, will save headaches down the road.
5. Legal and Logistical Issues
Real estate law is complicated enough when it’s just one or two people buying a home together. Add multiple friends into the mix, and you’ve got a recipe for potential legal and logistical problems. That’s why it’s vital to work with a real estate attorney to create a co-ownership agreement. This document should cover everything from how repairs and maintenance are paid for to what happens if one of the owners passes away.
While it may feel awkward to talk about these things before you even move in, it’s the best way to ensure everyone’s interests are protected and that your friendship doesn’t suffer because of a lack of planning.
But Here’s Why It’s Still Worth It
Now that we’ve laid out all the potential pitfalls, let’s talk about why buying a house with friends can still be a fantastic idea.
• Building Equity Together: Instead of paying rent, you’re all contributing to an investment that can grow over time. Every mortgage payment you make builds equity, and in a city like Austin, where property values tend to rise, this can be a huge benefit.
• Strengthening Friendships: Yes, there are challenges, but living with your friends can also deepen your bonds. Shared experiences—whether it’s hosting dinner parties, tackling DIY projects, or just enjoying your new space together—can strengthen your friendships in meaningful ways.
• A Stepping Stone Toward Your Dream Home: Buying a home with friends can be a stepping stone. Over time, you might decide to sell the house and use your share of the equity to buy your dream home, whether that’s on your own or with a partner. The experience of owning property, managing finances, and learning the ins and outs of real estate will be invaluable when you take that next step.
At the end of the day, buying a house with friends can be a wonderful opportunity, as long as you go in with clear expectations, legal agreements, and open communication. Yes, things can go wrong—but the potential rewards far outweigh the risks.
By pooling your resources, you’re not only making homeownership possible, but you’re also setting yourselves up for long-term financial success, while growing your friendships along the way. And that experience? It’s priceless when it comes to securing your future dream home.