How To Buy A House With A Friend: The Ultimate Guide

Abhi Golhar

WealthFit Contributor

If you’re working in order to buy your first house, or if you’re looking for a way to begin building a real estate investment portfolio, your biggest obstacle is likely money. Finding a friend with similar goals is one way to get you to the closing table sooner than expected.

Buying a house with a friend means you’ll increase your purchasing power, which allows you to buy a better house, buy in a nicer market, and therefore build more value.

Deciding who to buy a house with, how to legally define ownership, and how to handle everyday expenses and operations are the keys to ensuring that you can meet your goals while maintaining a good relationship with your friend and ownership partner.

Buying a house with a friend is not something to do impulsively—it requires thought, planning, and an honest understanding of the risks and benefits. If it’s done right, the financial and personal rewards are huge.

Types of Ownership: Joint Tenants vs. Tenants in Common

There are many ways in which two or more people can share ownership of a property. The two main ways are called Joint Tenants and Tenants in Common.

It’s important to remember that although the word “tenant” usually refers to a renter, in this legal context it is a type of ownership.

Joint Tenants

Joint Tenancy means that each owner has an equal share in the property they own.

Aside from many benefits related to a 50-50 ownership, it can work well in regards to inheritance for a married couple. In the event that one of the owners passes away, ownership passes directly to the spouse, whether or not there is a will, without going into probate.

However, this does not happen if you’re buying a house with a friend. In that case, the entire property’s value is included in the deceased person’s estate, making this a bad choice for friends who own a property together.

Joint Tenants with Right of Survivorship

In Joint Tenancy with Right of Survivorship, if one of the owners dies, the value of the property goes in full to the other owner. This might be a good choice if neither of you has other family or heirs and if you would want the surviving owner to keep the full value of the property.

If, however, either or both of you would like to pass the value of your share of the property to an heir, you will need to choose Tenancy in Common.

Tenants in Common

As Tenants in Common, you and your friend will each own an undivided share in the property in whatever proportion you wish: 50/50, 75/25, or what have you. This is a great option if one of you has more money to put down and to pay toward the mortgage each month than the other.

If one of you dies, his or her share of the property will pass to his or her heirs. That means that it is important for each of you to have a will or other legal document spelling out how you want your assets—and specifically those related to the property—distributed.

Different types of ownership have different tax and inheritance implications, so it is important that you sit down with an attorney or financial planner in order to ensure that you are doing what is best for your particular financial situation.

Handling Decision-Making

Because you are sharing financial decisions and personal space, it can be challenging to partner with a friend on a home purchase while also maintaining your relationship. If you follow these guidelines, you’ll ensure that you can stay on good terms while also making smart choices.


By far, effective communication is the most important part of any relationship, and that is especially true when there is money, property, and friends involved. All decisions about repairs, upgrades, or changes to the property must be discussed and agreed upon.

If you find yourself in disagreement, talk to a trusted real estate attorney, financial advisor, or an expert local mentor to be sure you are making smart decisions about the upkeep and financial benefits of the property.

It’s a good idea to schedule regular times to check-in with each other regarding the home rather than letting small annoyances build up and cause a major fight. You might want to schedule a call once a week or meet once a month at first, just to make sure that you are on the same page when it comes to the mortgage and bill payments, and cleaning and upkeep of the house.

Eventually, you may be able to stretch out the time and meet once a quarter or once each year.


You will both feel better if you put together an agreement outlining your responsibilities when it comes to the property. Think through what will happen if one of you decides you want to sell, if one of you is getting married, or you’re moving across the country to take a new job. Will the other owner buy both shares, take on another roommate or partial owner, or will both of you sell the property and split the proceeds?

How much notice do you need to give each other of a major change in your ownership arrangement?

What if you need to exit at a low-point in the market?

Will you share the loss or will it come out of the ownership stake of the one who is changing the arrangement?

These are all important things to consider and decide before you merge your money in a property.

In addition, be sure to put together a file box with all of the paperwork for the house, receipts for anything that is spent on the house, tax and insurance records, and all other relevant documentation.

You should each have access to all of the home’s records as well as online mortgage account information so that you can be sure that payments are consistent and timely.

A pro tip is to use a shareable online storage and recordkeeping tool, like Dropbox or Evernote for files and Quickbooks for accounting.

Define Responsibilities

If one of you is good at budgeting and finance and the other is good at DIY and repairs, it might make sense to identify your weaknesses and divide up responsibility for the property according to your strengths. You should still discuss and agree on major decisions, but the partner with more expertise might be the one to lead that discussion, provide explanations, and make suggestions.

Don’t let a love of design create an unnecessary financial burden. If one of you has expensive taste and is always looking to upgrade to the latest and greatest smart-home gadgets or design elements, it is important to compromise and keep an eye on the financial bottom line.

Remember, part of the reason you’re buying a home together is to create financial benefits. You won’t benefit if you’re overspending on the latest bells and whistles in home automation technology.

Prioritize Repairs and Improvements

Over time, you may decide you want to upgrade some of the systems, finishes, or spaces within the home. It is important to make these decisions together as joint tenants and to ensure that you are staying within the budget you have agreed upon. In addition, you’ll want to make sure that any changes enhance the value of the home, rather than detract from it.

For example, you may think that it would be fun to have a private pool in the backyard. In some markets, this type of improvement will raise the value of the home, especially in areas with year-round mild weather like resort-type areas or coastal communities. In other areas, a pool is commonly seen as a burden when it comes to upkeep, and may in fact make your home less valuable.

Instead, consider enhancing your outdoor space with the addition of a deck or patio for a similar cost and possibly a fire pit for those cooler nights. This type of improvement will almost always increase the value of your property, while also meeting your desire for more outdoor living space. In this way, you’ll enjoy your home while also keeping an eye on the long-term potential of the property.

Create a Common Fund

Because you will have ongoing expenses for upkeep, maintenance, taxes, insurance, and homeowner’s association (HOA), along with unexpected events like storm damage or a major appliance or system replacement, you should each contribute to a common reserve fund each month to be used exclusively for upkeep on the home. That way you don’t have to worry about an unexpected repair bill leaving one of you holding the bag, or both of you scrambling to come up with the necessary funds.

How much should you set aside? First, add up all of the expenses you know you’ll incur over the next year, including HOA or condo dues and ongoing upkeep like landscaping or other expenses. Then add a yearly expenditure of 1-3% of the home’s value in order to come up with a reserve that will help you prepare for the unexpected.

Exit Strategy

There are a variety of ways that you can separate your shares in the home, should you decide that you no longer want to live in it jointly. These include:

  • Selling the home and splitting the profits earned
  • Determining the value of the home and then buying your friend’s share
  • Converting the home into a rental property and splitting the monthly cash flow after all expenses are paid.

You’ll generally want to live in the home for at least five years in order to ensure that you build up enough equity to make the home purchase worthwhile. This is why it’s a good time to think about your long term financial, professional, and personal planning when deciding whether to buy a house with a friend.

Examine Your Personalities and Beliefs

Choosing a roommate can be difficult—you want to make sure you are compatible, that they’ll keep their part of the house or apartment clean, and that they won’t throw loud parties every night when you have to get up early for work.

Choosing someone to purchase a home is a much bigger commitment—one that can have a major impact on your financial future.

When it comes down to it, while there may be many friends you’d like to share a Saturday night pub crawl with, there aren’t as many whose financial life you’d like mixed in with your own.

Buying a home together requires three key ingredients:

  • thought
  • planning
  • preparation

It’s important that your personalities, communication styles, financial philosophies, and sense of personal responsibility compliment each other. Choosing the right friend and co-homeowner can pay great dividends, but choosing the wrong one can be costly. It’s important to choose wisely.

Duplexes, Triplexes, and Quads

If you’re interested in increasing your buying power to add more value and pay off the mortgage quickly, consider purchasing a duplex, triplex, or quad instead of a single family home.

This way, you can start out as roommates while renting out the other units in the building, allowing the rent money to pay all or part of the monthly mortgage with hopefully net positive monthly cash flow leftover for you.

Other properties with rental potential include homes with tiny homes, carriage houses, or guest houses as well as those with basement or garage apartments. Any of these can allow you to supplement your monthly mortgage payment by taking in a renter.

This is an especially attractive option in college towns or in resort areas when you rent out the home as an Airbnb or vacation rental. Be sure to understand your local laws before adding an additional structure to your existing property, because some municipalities will allow it and some won’t.

Hiring a professional, local property management service can have the right expertise to help navigate these laws, ensure monthly rent collection, and coordination of regular maintenance to keep your property in great condition.

Should one or both of you want to move out of the home, you could still use it as an investment vehicle and rent out the available unit or units. In this way, buying a house with a friend isn’t just a good idea in the short term—it can be a valuable way to start building long-term financial stability and wealth.

An Investment For Your Future

If you’re thinking of buying a house with a friend with as either Joint Tenants or Tenants in Common, be sure that you think long-term and make a plan that works for both of you, both day-to-day and over the years to come.

With thought, planning and preparation, this is a great way to invest in real estate, make your home-buying dollar go further, and build wealth now and in the future.


Written By

Abhi Golhar

The Chief Investment Officer of Summit & Crowne, a real estate investment firm in Atlanta, Abhi Golhar has been investing in real estate since 2002.