5 Questions to Ask Before Buying a Second Home with a Family Member
Your kids will have fantastic memories of vacations spent running around outside with their cousins, unplugged from their phones. Meanwhile, you and your siblings can recreate your childhood vacations, only this time with more alcohol and less fighting in the backseat. Sounds like a little slice of paradise, right? Before you jump in, you'll want to get some things straightened out.
How will you pay for it?
Unless you all have cash, actually paying for the house can be tricky. Will your sibling with the best credit rating and lowest debt to income ratio apply for the mortgage? Or will you be applying for a joint mortgage?
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Will you rent it?
Renting your vacation home when no one’s using it can be a great investment. But if having strangers in his space gives your brother the heebie-jeebies and your sister wants to be able to use the house on a whim, renting might not be the best option. Make sure you talk about all that upfront so no one is blindsided by something they thought everyone agreed with them on. If you do decide to rent it you open up a whole other discussion. Who will be responsible for the landlord duties? How much of the year will you rent it? Will you split the money or will you put it toward upgrades and repairs on the house?
What if someone wants to sell?
You absolutely need to get this one in writing before you finalize anything. Maybe your sister moves to the other side of the country and can’t use the house as much. Or maybe your brother made some bad investments (you told him pet rocks were not making a comeback) and the house is looking like his Get Out of Jail Free card. Make sure you all agree on when, if, and how someone can back out. After all, a forced sale won’t improve your relationship with anyone.
How will you split time?
Sure, you love your siblings. But does that mean you want to commit to spending every single vacation with them? Probably not. Talk about how much time each family will have at the house. Draw names, throw darts, or wrestle for your weekends. It doesn’t matter how you come to an agreement. You just have to agree.
How will you split expenses?
This is your second home. So you know expenses don’t stop with the mortgage. You still have to worry about insurance, utilities, repairs, and a whole heck of a lot more. Will you split everything evenly? Will one sibling have more financial responsibility than the others? Make sure everyone is on the same page with this one and you’ll be able to avoid a lot of squabbles in the future.
Now the only thing that's left to discuss is if you'll buy in the mountains or the beach!