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Has the Advantage of Co-Owning Real Estate with Family, Friends, and Others Become a Reality?

With the rapidly rising cost of living, homeowners are seeing an increasing lack of affordable housing across most major cities in the US. The time has arrived for creative housing solutions and co-ownership of real estate might offer just that answer. Whether you are seeking to buy a property for rent or development, there are several different ways to co-own real estate.

Common Ways to Co-Own Property

Tenancy in Common. Tenancy in common is also a form of joint ownership in which each of the co-owners has ownership interest in the entire property.  With a tenancy in common, each owner owns a percentage interest in the property and can transfer that interest however he or she wants. If one of the owners sells or leaves their share of the property to someone else in a will, the person who buys or inherits the land will then become a joint owner with the other joint tenants.

Joint Tenancy. Joint Tenancy is another ford of co-ownership where each owner must have an equal ownership interest in the property and you can’t leave your interest to someone in a will. If one of the joint tenants dies, his or her interest immediately ceases to exist and the remaining joint tenants take over ownership of the entire property.

These co-ownership options make home buying more affordable for individuals that have been priced out of the current real estate market. As a recent LA Times article pointed out, “Tenancy in common migrated south from the more cutthroat market of San Francisco, where it’s been around for decades. As Los Angeles grew more expensive, TICs gained ground here… TIC units are now selling at an 11% to 15% discount relative to comparable condos” 

The Pros of Co-Owning a Home

  • More borrowers make, makes loan qualification easier. With more challenging lender standards when it comes to credit score, debt to income ratio, etc., it’s easier to qualify if you bring in more income to offset the debt.
  • If all the new borrowers will be occupying the new home together, you also get to share expenses such as splitting the utilities. Having joint ownership helps offset some of the big expenses of owning a home.
  • There’s also the perk of getting to claim mortgage interest on your taxes, but keep in mind, you’ll have to split the total amount with your co-borrowers.

Joint Ownership Downsides

Sharing the burden of a home loan and all that goes into being a homeowner often creates an opportunity that wouldn’t be possible for any of the borrowers on their own. However, making a big commitment as complex as sharing a home and a mortgage with someone means that you have a long-standing financial obligation to each other. While joint ownership of a home is a great idea in theory, it only works if all parties are on board and willing to keep up with the financial commitments. If not, it will cause headaches and disagreements down the road.

Lastly, draft a written agreement. Any decisions you make regarding your ownership interests and how you will share the costs and responsibilities of maintaining the property should be put in writing so they become legally binding.

Joint ownership is a novel way that is making homeownership affordable for many buyers. If you are currently in the market for a home, consider this option and as always do your due diligence!

5 Tips for a Stress Free Home Sale

Open House. Door keys.

As a seller you are an integral part of a successful open house. Here are five tips that can help you sell your home without even being present during the open house!

Tip 1. Hire the Right Agent!

This cannot be stressed enough. The right real estate agent isn’t just someone who can sell your home the fastest but someone that understands your motivations and at the end of the day, puts your best interests before their paycheck. You want to align yourself with an agent that not only brings you top dollar for your home and is easy to communicate with but one who is sincere and diligent in the way they conduct their business. After all, a home is the biggest purchase most of us will make in our lifetimes. Having the right agent in your corner can make a world of difference.  

Tip 2. Home Inspections

Start by inspecting your home with the agent or a qualified home inspector to help determine what needs to be repaired or replaced. Making these improvements will help both the property value, as well as the presentation when staging your home for the open house. Address any obvious issues before moving on to Tip #3.

Tip 3. Appraisal

Next, work with the agent or a professional appraiser to determine a fair market value for your home. Your agent should conduct a thorough market study of comparable sales highlighting recently sold homes in the area that are similar to yours. This will give you a good indication for how to price your home competitively in order to avoid the headache of a drawn out sale with potential future price adjustments!

Tip 4. Hire a Skilled Photographer

The old adage “A picture is worth a thousand words” cannot be truer when it comes to listing your home for sale. Clear, bright photos work wonders to draw in potential buyers and capture their attention. You want to do all that you can to showcase the positive attributes of your home and what better way to do that than eye catching pictures.

Tip 5. Organize and Stage Your Home for the Open House

Start with getting rid of the clutter! Not only will this make your home feel more spacious but eliminating things you don’t use will help make moving easier. In open houses, people peek into every closet and like to open drawers. Make sure that whatever you have left in your home after de-cluttering is tidy and organized.

For about $2000 /month you can hire a professional home staging crew that will deck out your pad with choice pieces of furniture to make it look stylish and move-in ready. You want potential buyers to be able to picture themselves living in your home and having the right furnishings in place can help them easily visualize this.

Lastly, a few points that bear mentioning before holding the open house:

  • Set out vases of fresh-cut flowers. They’ll make your home smell nice and add a splash of color.
  • Let in the light! Buyers want a bright, open house, not a dark a dreary cave. Turn on all the lights and open all the curtains to let in natural light.
  • Adjust the temperature. Keep the home comfortable – not too cold or not to hot.
  • Finally, leave for the day! The last thing buyers want is a curious seller hovering in the back. You want to afford potential buyers the luxury of seeing your home freely and without any pressure. The more comfortable they feel to linger about, the better your chances are of making a sale!

Good luck!

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What about Asset Managers?

Asset Managers have a fiduciary responsibility to oversee their portfolio from an owner’s perspective and act in the owner’s best interests at every step along the way.

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