3 Things to consider before sharing ownership of an apartment with friends and family
I just came back from my annual winter ski holiday.
Of course, most of the holiday towns in British Columbia have been visited by Sun Peaks Resort in British Columbia, with some good friends in California and Dubai. Has been known as "impersonal" part ownership schemes, time shares, shared ownership in the form of 1/4 shares, lease pools or other programs involving people you do not know. This is the subject of another communication [19459003
On the front …
I have a friend who recently purchased an apartment in a lake cottage.
With the other two (related) families. They share these three ways, each using their own or leased to others for 17 weeks. So far they like it and I have taken part in the triennial I will be included this year
Overall, the big attraction of this idea is low barriers to entry, sharing the risks and rewards of people you know, and the "overlap" benefits of the same time as New Year's Eve
Things to note
Doing business with people you like – yes, investing in apartments is "doing business" – is that you do not want to jeopardize good relationships if something goes wrong. This, I made three suggestions to earn a profit (and fun) real estate investment without losing the way of friends and family:
Establish a clear set of written rules.
For example, the second property may not always be used by the owner. This creates opportunities for renting part of or exchanging time with other owners. In the case of a resort-managed property, unused time is put into a pool of rent, and profits are distributed to the owner.
So sit together and formulate a policy how to calculate the time. Are each owner responsible for certain days / weeks and the costs associated with cleaning up and leasing some of their parts? Or should you set the daily rental fee that each person pays and allocate the owner's profit at the end of the year? (Personally, I prefer the latter approach – partnering as a business to share any risk and reward). There is no right answer here. But if you do not discuss the possibilities of the previous – and put them in the book – you'll leave the door open to the feeling of confusion and injury.
Establishment of a contingency fund.
There is nothing more than managing the issue of holding less budgeted real estate. Agreed funding for 6 to 12 months. This should give you enough money to stay ahead of any maintenance surprises and possible general wear that can occur.
If one of the partners dies, cooperation or life insurance can protect other owners also smart. This cost can be shared and the terms of the legal agreement established to protect the remaining partners from possible future real estate issues
Agree to exit strategy.
The odds that you all want to stay forever or at the same time are very low. So consider and agree – what happens when cousin Dave needs to pay his daughter's college expenses in cash. Do other partners have the right to refuse? How to determine the price?
In most cases, the remaining partners either buy shares or find the people they are willing to take over. Therefore, the partnership agreement should have provisions to allow reasonable time for the remaining partners to arrange funds or find the right person to intervene.
Remember to also plan a "trigger" event, such as when a property's value reaches a certain level when selling the property (which is an investment, after all). This should also be agreed upon before the purchase is completed. In general, part ownership with someone you know and love can be a terrific arrangement, from an investment and entertainment perspective. In other words, as with most things involving friends and family, some of the planning and discussion will have a long way to go.
For me, I'm looking for this type of arrangement New Year's Eve Crab Festival