Buying a house in the bay with my friends

Facebook Atnn72
Nov 4, 2017 31 Comments

4 of my good friends and I are going to be new grads starting jobs in the bay this coming year. We all have good new grad salaries and we're wondering how practical it would be for us to buy a house a few years from now. Ideally we would all be responsible for 1/5th of the down payment and mortgage. How feasible is this? Is there anything in particular to consider? Are we being naive?

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TOP 31 Comments
  • HPE KEERTI
    This has bad news written all over it, almost every time I’ve seen folks that aren’t married/in a relationship do this it ends badly.
    Nov 4, 2017 0
  • You're going to need to write up a very extensive contract
    Nov 4, 2017 1
    • Square MarkCuban
      Reality show execs probably have an easy template
      Nov 4, 2017
  • Amazon UJVs78
    Incorporate a LLC and buy the home through the LLC.
    Nov 4, 2017 4
    • Workday Xayf32
      why?
      Nov 5, 2017
    • LinkedIn TaFP35
      Because then you own shares in the LLC which owns the home. You can divvy up shares according to whatever deal you cut with one another (maybe the one with the smaller room pays less and gets fewer shares).

      If you go the LLC route recognize a few things: (1) it'll cost a few thousand in legal fees. Please don't legal-zoom it. Legal zoom is for lemonade stands. And (2) you lender won't give you as sexy of a rate. When you mitigate risk on your side (by forming an LLC), the lender does the same in theirs (by jacking rates up).
      Nov 5, 2017
    • If you don't use an LLC you're a fool. Save yourself some headache in the future. :)
      Nov 5, 2017
    • At least transfer to a shared LLC immediately after purchasing. Some banks won't agree to LLC purchases.
      Nov 5, 2017
  • Microsoft dyermaker
    This never works, ever.
    Nov 5, 2017 0
  • LinkedIn vfgh215
    Lol
    Nov 4, 2017 1
    • Facebook Atnn72
      OP
      Hehe
      Nov 4, 2017
  • LinkedIn TaFP35
    It won't work because think about all the permutations:

    one of you gets married and wants to move out (or their partner in). Does the partner contribute to the mortgage? If so, how much?

    One of you loses their job and can't afford their fair share. What do you do? Subsidize them? Kick them out?

    One of you wants to buy your own home and wants out. How many other buyers would say to themselves, "I'd love to spend $300k to live with these other 4 random people.

    The place needs a new roof and everyone has to kick in $5k that month to cover the new roof. What if one of you doesn't have it. Now everyone else has to cough up another $1k to cover.
    Nov 5, 2017 0
  • Microsoft dyermaker
    Nope nope nope
    Nov 4, 2017 0
  • Google Linda
    Horrible idea. What you will save in the down payment will be used for the lawyer to draw up a contract. It would be extremely complicated especially with 5 people involved in it.
    Nov 4, 2017 0
  • Square Roundrec
    Crap idea, don't do it. Just rent a badass house.
    Nov 5, 2017 1
  • OmniTier Storage
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    Google, Facebook, Apple, Salesforce
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    Bad idea, but if you are pursuing this plan, then make sure you guys have proper exit plan describe in the contract... There are tax advantages of owning a house. It's difficult to get this straightened up without buying a house under a legal entity such as corporation or LLC.
    Nov 4, 2017 0
  • Autodesk NudI38
    I know it sounds good when you guys/girls talk about it but 5 people means 5 different view points on the same investment. You guys just graduated, how much is going to change in the next 20-30 years?
    What if someone wants to sell their stake? What if someone becomes delinquent? Shit happens all the time, with 5 people involved you're exponentially increasing those odds
    Nov 5, 2017 0
  • Microsoft / Design Wubadub
    Let say you want to sell and the other don't... Yeah, just a terrible idea.
    Nov 5, 2017 0
  • Fitbit / Ops LlamaDrama
    Friends and money is a terrible combination
    Nov 5, 2017 0
  • Groupon rahul
    Make it a harem
    Nov 5, 2017 1
    • LinkedIn lenerd
      An industry ripe for disruption
      Nov 5, 2017
  • Cisco / Product villan
    Who gets to deduct mortgage interest in this case ?
    Nov 4, 2017 1
    • Oracle vawinzop
      Proportional to payment.
      Nov 4, 2017
  • Microsoft asdfghjke
    Bad idea in many ways. Rent together instead.
    Nov 5, 2017 0
  • Squarespace / Eng tr33
    Just rent with them and invest your money on other things
    Nov 5, 2017 0
  • Genentech icqJ06 🐙
    It can be done if you really want to. But a house is typically a 30 year mortgage. Much longer time than you have likely been alive. The hardest part would be if someone wants to pull out of the deal. Maybe they need the cash to pay for a parent's medical treatment. Other folks might not want to sell at that time. Given the market fluctuations in real estate, either one or the other four will be upset about timing.
    Nov 5, 2017 0
  • Facebook public
    Why not just buy your own house?
    Nov 5, 2017 0
  • Microsoft / Eng Pikaboo
    Will you be able to get a loan? I bet your outlook will change in a few years.
    Nov 4, 2017 0

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