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 good side …
I have a friend who recently bought an apartment.
Today's newsletter focuses on buying apartments with friends and family.
Lake Cabana with two other (related) families. They share these three ways for 17 weeks each using their own or renting someone else. So far, they like it and I have taken part in this year I will be included in the three
In general, the big attraction of this idea is low barriers to entry, sharing risks and rewards with people you know, and "overlapping" times like 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 the good relationship if something goes wrong. With that in mind, I made three recommendations to earn a profit (and have 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 ample funds to stay ahead of any maintenance surprises and general wear that may occur
Co-operation or life insurance is also smart and protects other owners if one of the partners dies. 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 arrangement New Year's Eve Crab Festival