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Brother wants me to go in with him on 50/50 ownership of an SFR in an $800K neighborhood.
l can put down $300K, he can put down $200K; with a mortgage for the remaining $300K. I’d make 1/3rd payment on that mortgage and he would make 2/3rds payment. Is it this simple, or am I missing something?
If you don't buy in an entity and don't have an attorney draft a contract clearly defining all aspects of the ownership relationship between you and your brother, you are missing two vital points.
It's this simple for today. What happens when one of you doesn't make the payment? What happens when suddenly you and your brother become estranged? What happens when one of you is married, if not now, and dies?
Our 20 something son was recently home for a visit. He was talking about 2 of his friends buying a house together. He also mentioned another friend that had co-signed for a car loan for a BF. They are no longer together. Even though he's a smart kid and has been out on his own for 3 years, we took this opportunity to reinforce to him that it's just a generally BAD idea to co-sign with someone on any type of loan UNLESS there are legal mechanisms in place that detail ownership and loan responsibility should one not pay. This might be marriage or it might be some sort of legal entity like an LLC. In his case he knows he should never share an apartment or buy a house unless he alone can make the payments.
If you don't buy in an entity and don't have an attorney draft a contract clearly defining all aspects of the ownership relationship between you and your brother, you are missing two vital points.
This is good advice. In your original scenario, you will each be 100% liable for 100% of the mortgage regardless of your intentions. You need an agreement on the liabilities and any income generated on the property.
Thanks, Mike, rrah and Jim; you all bring up good points.
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