Buying a home in seattle with two friends
Two close friends and I are going to start working at microsoft in seattle next month. We are planning to buy a home or apartment around redmond or seattle in a year as an investment and for us to stop paying rent. Our idea is that between the three, we can finish paying a decent place within 3 years. After that we can still live together or go our separate ways. TC average: 145. Do you guys consider this is a good idea?
Best way to ruin friendships? Hopefully not and I'm wrong
Dont do it!
Can you argument these thoughts?
We are at the peak of the market, pouring all your money into paying off a house over 3 years is a bad investment. Plus it becomes tricky if e.g. one of you wants to sell it but not the other. Real estate is illiquid investment with high transaction cost even when buying alone. Splitting it 3 ways will be a nightmare. You may feel close now, but when you get married each of you will have your own financial goals and they might not all align.
What happens when one person gets a GF and wants her to move in with them? Then suddenly they're occupying more than 1/3 the house. But it doesn't make sense to increase the equity they pay. Could make the GF pay rent that gets distributed between you. I'm not saying any of the problems are insurmountable. It's just if they're not discussed in advance it could lead to arguments later
Chances of everyone wanting to sell at the same time are slim to none. I’d be very explicit about buyout terms.
Bad idea. The investment is highly illiquid and even if you agree in the future on when to sell how are you going to agree on how much? Plus what if some of you get lay off or for any reason has to move ? To many unknown in life
Bad idea for human reasons, let alone investing reasons. Better options: 1. Rent and split 3 ways, instead of buying 2. One of you buy a place and rent it to the other 2. Work out fair rent split based on Craigslist prices. This way when you split up there's no messy lawyer stuff.
Thanks, sounds good
My stepdad did this and they lived at the place for a few years and flipped it. They bought at a good time and all made money. Practice living with these people beforehand and lawyer up.
That is awesome
We will take into account all of your comments
Don't. Unless those friends are like family and by that I mean, literally family. If one of you lose your job or need to leave Seattle, there's no exit. The others have to cover. Legally the person who exit owes you nothing. And that's just one of the problems..
Get a lawyer and a contract written down. Things can and will get ugly.
Noted, we are aware it might not work out. Thanks