Sharing the Cost of Home Ownership

Sharing the Cost of Home Ownership

The high cost of real estate in some Canadian markets can present a challenge to people wanting to enter the housing market.  First-time buyers in particular may find they have to make adjustments to their vision of a dream home, and start with something more realistic.  It’s no wonder that young people in Canada are staying at home longer these days, in order to save for a down payment.  In fact, in these days of employment uncertainty many homebuyers today want a home that has the potential to generate income, and are looking for a property with a rental apartment or flat to help offset their mortgage payments.

There are other home-ownership alternatives to help buyers build some equity in the real estate market.  An option that may be of interest to some individuals is the joint purchase of a multiple-dwelling property by more than one group of buyers.  For example, a legal duplex might be jointly purchased by friends or relations, with each family group occupying one of the property’s units.  The duplex approach can work well in situations where young people plan to move away to marry, leaving their parents as “empty nesters”.  In this scenario, the family home is sold, with the parents buying one unit of a new duplex outright, and then 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 might elect to jointly buy one single-family residence and share all the living space. 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.

Whatever method you use to ease the cost of homeownership, 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?  How will the upkeep and chores of the property be handled?  Who will decide what maintenance expenses are incurred and how will they be funded?  What happens when someone wants to sell? Does one party get the first right to buy out the other’s interest?  If so, how is a fair price determined? How long does the other owner have to make up their mind before the remaining partner sells their unit?  Or, is the entire property put on the market with all parties sharing the proceeds and then going their separate ways?

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 options that you’d never considered, and help you make your home ownership dream a reality.