PLANNING TO BUY A VACATION HOME WITH FRIENDS?
Are you planning to buy a vacation home with your friends? Wait. Hold your horses.
Many of us dream of having a vacation house someday. However, because of its hefty price, the dream of having a beachfront property remains a dream. To make it a reality, some people tie up with friends to split the price and the expenses relative to second home. Sounds a good plan, right? But you may want to reconsider the plan. Purchasing a vacation home may be dangerous to your friendship, as the property can make or break each of you, not to mention the potential legal fight over the property. And most importantly, you have to be willing to compromise.
Speaking of which, are you willing to compromise on everything? Remember, all parties need to agree on all the information pertaining to owning a vacation property. And every person has differing taste in terms of the kind of house they like, decorations, furniture, and location. Also, you have to figure out the use of the second house. Will it be used year round or rented out to earn income? Ironing these matters ahead of time will prevent fights after the purchase is complete.
What if someone wants out of the investment suddenly? You need to take it into account, too. Think of possible scenarios in case one or more decides to get out of this endeavor or wants to sell the property. It is helpful to grant all parties the right of first refusal in order to reduce conflict. You also need to think about if you could afford to buy out a partner or if you could shoulder the additional mortgage and maintenance costs in case one party wants to get out of the investment.
Last factor to be examined is maintenance and scheduling. Friends like to spend time together. But in some instances, schedules do not mesh or some ‘me’ time is desired. If you buy a property with friends, you will need to plan who gets to use it when and how the upkeep will be done, as well as who is going to pay the expenses each month. Acquiring a second home with friends entails planning and someone to overlook all the scheduling to keep the property conflict-free.
Now, are you still planning to buy a vacation house with your friends?
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