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So I'm a single 29 year old guy and I just recently paid off all my debt (student loans, car, credit cards, etc.) and have saved up some money.
Convention says I should buy a house, but after paying off all my debt the last thing is I want to do is get into a mega-debt. Renting is ok but it's potential investment money lost, so I thought an alternative would be to go in on a house with, let's say, 3 friends.
I think it would be reasonable here (NM) to find a nice, 4-bedroom house for $400k, so we would each commit to $100k. If one person backs out, the amount they paid down and monthly remains their share in the equity if the house is sold later.
I'm not really seriously considering this, but does anyone know if more than 2 people can go in a mortgage?
Sure, more people can go in on the loan, but I would say your idea is a terrible one. All 4 of you would be committing to the full $400k. A lot of things can go wrong with your scenario.
You can put whomever you want on a mortgage as long as you all qualify. They will look at the lowest score and take everyone's debt into consideration. Horrible idea. Many people don't remain friends in big transactions like this. I mean, who gets the master bedroom? Who gets the tiny room?
I agree bad idea. If you move forward, I suggest consulting with an attorney. You should consider some form of partnership agreement that spells out the arrangement.
So I'm a single 29 year old guy and I just recently paid off all my debt (student loans, car, credit cards, etc.) and have saved up some money.
Convention says I should buy a house, but after paying off all my debt the last thing is I want to do is get into a mega-debt. Renting is ok but it's potential investment money lost, so I thought an alternative would be to go in on a house with, let's say, 3 friends.
I think it would be reasonable here (NM) to find a nice, 4-bedroom house for $400k, so we would each commit to $100k. If one person backs out, the amount they paid down and monthly remains their share in the equity if the house is sold later.
I'm not really seriously considering this, but does anyone know if more than 2 people can go in a mortgage?
Others have already given the advice I would give, but I would just add that you already assumed that "if one person back out" there would be equity. What if somebody backs out, or more and you are underwater. The problem with deals like this is nobody ever considers the worst case scenario of two people backing out, the house going down $100k in value, somebody declaring bankruptcy, etc.
Yeah you're probably right. I might just buy a house and let them pay me rent, but then again mixing friendship and money is usually a bad idea no matter what the circumstances are.
then again mixing friendship and money is usually a bad idea no matter what the circumstances are.
Very true. If you do rent out to others, rent to strangers so you don't have to worry about a friendship if things go south.
And $400K may be way more house than you need. I don't know much about New Mexico, but I think you're shooting for the moon with that price range right now.
Yeah you're probably right. I might just buy a house and let them pay me rent, but then again mixing friendship and money is usually a bad idea no matter what the circumstances are.
Congrats on paying off all your debt, that's great at your age!
Just one comment that's not really a financial comment: a 29-year-old guy with 3 roommates? Sounds more like a college/grad school apartment. Not saying it would really BE that, but for dating etc. I think women (or men for that matter) might find it odd to date people in their late 20s/early 30s who have lots of roommates.
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