With home prices staying high and rent offering little long-term return, many buyers are getting creative. One solution that’s gaining traction is co-buying a home with friends. Whether it’s a vacation getaway or a primary residence, pooling resources can help you afford a better space sooner. But shared ownership comes with real financial and emotional stakes. If you’re not careful, what starts as a smart investment can quickly spiral into tension. The good news? With clear communication and the right structure, it can work beautifully.
Start With the Right People
Buying property with friends isn’t something to jump into lightly. You need similar communication styles, long-term objectives, and financial habits in addition to common interests. The ideal co-owner is someone responsible, transparent, and realistic. That means discussing credit scores, job security, and even how clean you like the kitchen. A strong friendship is a great foundation, but compatibility in money matters is even more important when real estate is on the line.
Put It All in Writing Before You Buy
Even if you trust each other, don’t rely on verbal agreements. Before making an offer, work with a lawyer to draft a co-ownership agreement. It should outline who pays what, how decisions are made, and what happens if someone wants out. Will one person handle the mortgage while the other handles repairs? What if someone misses a payment? What happens if one person wants to sell in five years and the other doesn’t? A written plan turns awkward hypotheticals into manageable conversations.
Choose the Right Legal Structure
There are several ways to legally own property with others, but “tenants in common” is usually the most flexible for friends. This setup allows each person to own a percentage of the home, which can be equal or weighted depending on who pays more. It also makes it easier to sell or transfer ownership later. Some friends even form a limited liability company (LLC) for the property to separate personal and investment finances. Talk to a real estate attorney or financial advisor to choose the right fit.
Create a Shared Budget for Upkeep
Monthly costs don’t stop with the mortgage. Property taxes, maintenance, insurance, utilities, and even unexpected repairs all need to be covered. Set up a joint bank account that everyone contributes to regularly. This way, the basics are always covered, and you’re not scrambling to split a plumber’s bill at midnight. Agree on a budget for home improvements and set limits for what can be spent without group approval. Clear rules help prevent resentment or passive-aggressive spending wars.
Plan for Use and Exit in Advance
If it’s a vacation home, decide early how the calendar will be split. Will you rotate holidays? Is there a booking system? What happens if someone wants to rent out their weeks? And if it’s a primary home, you’ll need to agree on privacy boundaries, guest policies, and shared space etiquette. Having a clear exit strategy is just as crucial, regardless of whether someone wishes to sell their share, buy out the others, or move out. Planning this before drama hits is the smartest move you can make. Sharing real estate with friends can be a savvy way to build wealth, enjoy better housing, and make memories together. But it only works when everyone’s clear on expectations and committed to honest communication.