How to Drastically Reduce Housing Costs by Purchasing Property with Friends
Are you tired of sky-high rent payments or the seemingly impossible task of saving up for a down payment on a house? What if I told you there’s a way to drastically reduce your housing costs while owning a beautiful property—and it’s more achievable than you think?
By purchasing property with friends, you can cut down on the cost of buying a home and create a shared living space that benefits everyone involved. In this post, I’ll give you an overview of how you can make this happen, so you can start imagining the possibilities of communal living and shared homeownership.
The Power of Shared Ownership
Let’s start with the basics. Imagine buying a $1 million property—but instead of shouldering that burden alone, you split the cost with 10 friends. Suddenly, that hefty $1 million price tag becomes much more manageable:
Down Payment: A 20% down payment on a $1 million property is $200,000. Split among 10 people, that’s just $20,000 each.
Monthly Mortgage: With a group mortgage, the monthly payment could be as low as $500 per person—far less than what most people pay in rent.
This shared approach makes owning a home significantly more affordable, allowing you to build equity and invest in your future rather than throwing money away on rent.
Why Buying with Friends Makes Sense
Aside from reducing costs, there are several other reasons why buying property with friends can be a smart move:
Build a Community: Live with like-minded people who share your values and goals.
Shared Resources: Pool your resources for a better quality of life, whether that means a larger property, a shared garden, or communal workspaces.
Financial Security: Real estate is a solid investment that can appreciate over time, giving you both a place to live and a valuable asset.
How to Get Started
So, how do you go about buying property with friends? Here’s a quick overview:
1. Find the Right Property
Search for properties that are spacious enough to accommodate everyone comfortably. Look for homes with extra rooms, guest houses, or even land that can be developed. These options not only provide space but also potential rental income that can help pay off the mortgage faster.
2. Explore Creative Financing
Don’t have enough savings? No problem. There are several creative financing options available, such as borrowing from family, saving smaller amounts over time, or using rental income from the property to cover costs.
3. Set Up a Legal Structure
Forming a legal entity like a Limited Liability Company (LLC) can protect everyone’s investment and make managing the property simpler. This structure also makes it easier for members to buy in or sell their share if their circumstances change.