Build home equity with a multi-family dwelling
For some people, particularly first time buyers, the high cost of today's real estate is making them reluctant to enter the housing market.
If this sounds like you, take heart! There are some alternatives that can help homebuyers offset costs while they build equity in the real estate market.
One option is the joint purchase of a multiple-dwelling property by more than one family or group. For example, a legal duplex might be jointly purchased by friends or relations, with each family occupying one of the property's two units. The duplex approach can work particularly well in situations where young people plan to marry, leaving their parents as "empty nesters". In this scenario, the large family home is sold, with the parents buying one unit of a duplex outright, and banking their surplus funds. The younger generation then assumes the more manageable mortgage payments on the remaining half of the duplex's price. In this way, they can start to build equity immediately without having to come up with a large down payment or getting into a high ratio mortgage.
In less formal arrangements, two couples may elect to jointly buy one single-family residence and share most of the living space, with the exception of their bedrooms and perhaps their own private sitting room. This can prove to be a very stressful situation, and the best chance for success is usually when there is a family relationship between the two couples, such two siblings with their spouses.
If you choose to ease the cost of homeownership with a multi-family dwelling, the most important thing to remember is to get the all the details worked out before you buy. Everyone involved in the purchase should agree on all sub-lease and re-sale provisions 'up front'. For example, can one party move out and sublet their living space to someone else? When someone wants to sell, is there a specified provision allowing one party to buy out the other's interest? If so, how is a fair price determined? Or, is the entire property to be put on the market with all parties sharing the proceeds?
As you can see there are a lot of variables to consider. Such important issues should not be left to chance. Don't expect that they'll be sorted out easily when the time comes. The best course of action is to get a lawyer involved and draw up an agreement that clearly sets out the rights and obligations of all co-owners.
Remember, when you're thinking of creative ways to ease the cost of owning a home, talk it over first with the expert. Tell your real estate salesperson all about your plans, so they can ensure that you're shown homes that conform to the appropriate zoning and municipal by-laws. Best of all, your Realtor may be able to suggest other options that you'd never considered, and help you make your home ownership dream a reality.
The Schacter Team - Your Langley Real Estate Experts.