It’s not surprising to find friends committed to their relationship that they even commit to engaging in a co-investment which is a very good thing.
However, while purchasing property together can have a lot of benefits, the situation can be very unpredictable especially when no planning was involved or without setting the right expectations between all parties concerned.
To protect long-term relationships, ensuring that issues when sharing an investment are properly discussed and weighed before jumping into one can truly avoid such awkward circumstances that can endanger your relationships.
Renting a property with a friend
Before friends decide to buy a home and share it as a residence, it would be worth a try to live together for a while first so they can experience the unique traits and habits of each one.
There have been numerous instances when friends started living together under one roof, only to be torn apart and break off the friendship because of personal differences that could not be tolerated or does not seem acceptable to the other party.
Try to lease an apartment for a three to six-month contract and try to discover each other and start establishing boundaries and see if you can co-exist harmoniously under one roof.
Another way to test it is to also discover each other by travelling and see how both or all parties how each one deals with various pressure and stress situations that are common when on vacation or travelling on the road.
This “trial period” can test the various components that are common and essential in friendship such as selflessness, patience, expectations, and resourcefulness.
Assess each other’s finances
When purchasing property with a friend, always remember that it entails a huge commitment even when both have to share the cost and responsibilities.
If friends share ownership of property investment, there’s more to just sharing the monthly mortgage repayments, but also need to share the burden of operating and maintaining the investment asset.
So, before going into a co-investment with a friend set a time to sit down and discuss going over both of your finances, including expenses, spending habits, savings, and incurred debts. Be as honest and transparent with each other as possible so that both may devise a shared agreement on how to service, manage, and maintain the business.
An effective way to go about it is for each one to create their individual budgets so everyone has a clear picture of their income and expenses, as well as disposable income that can be poured into the investment.
It will also help make both parties adjust to any change in their habits or practices that could e essential to a shared investment partnership.
Plan ahead and set expectations with each other in terms of responsibilities and tasks that each one must commit to and be held accountable.
Not only does this ensure that you get to ensure smooth-sailing investment operations, but it also protects and preserves your relationship as co-investors and as friends. Do not hesitate to agree to provide constructive feedback or correction, when needed, not to put down the other but to ensure that each one is empowered and learn as you go along with your investment journey.
Discuss and agree on legal considerations
It would be wise to consult a solicitor to help create a co-ownership agreement that details the important points of your partnership as co-investors.
These include mortgage payments, responsibilities, provisions when either one fails to comply with their assigned responsibilities such as mortgage repayments, what happens when one decides to sell their share of the investment, etc.
Always remember that while it is an amazing idea to co-invest with a friend, ensure that the investment assets are planned and managed well so that all parties concerned are protected and be able to reap and enjoy the benefits of their investment venture.