Buying a small multifamily property with a family member or friend can make a purchase possible when one person does not want to carry the entire cost or responsibility alone. It can also create disagreements if the partners have not talked through how they will own, use, manage, and eventually sell the property.
Have the hard conversations before you shop
- Who is contributing cash, and how will each person’s contribution be recorded?
- Who will live in the property, if anyone? How will the units and housing costs be handled?
- Who will manage tenants, repairs, bookkeeping, and communication?
- How much money will be set aside for repairs, vacancies, and unexpected expenses?
- How will partners approve major expenses, refinance, or a future sale?
- What happens if one partner wants out, cannot contribute, or needs to sell?
These are business questions as well as family questions. Put the answers into a written agreement prepared with appropriate legal and tax professionals. A handshake does not settle how to handle a disagreement years later.
Check the property and financing as one plan
Before making an offer, review the property’s actual income and expenses, condition, occupancy, and likely repair needs. Then ask a lender how the proposed ownership and occupancy arrangement affects financing. If one person plans to occupy a unit, the lender must confirm whether the chosen program fits all borrowers and the property.
A duplex, triplex, or fourplex can offer different choices from a single-family home, but the partners still need to agree about affordability, responsibilities, and risk. Do not base a purchase plan only on the hope that rent will pay everyone’s share.
Put a real scenario on the table
Suppose one partner will live in a duplex and the other will not. Before touring, discuss how occupancy affects each person’s contribution, how repairs will be funded, and what happens if one wants to sell. Bring that proposed arrangement to the lender and the professionals preparing your ownership agreement.
Build the purchase plan together
Juan Michael Sr & Associates helps Los Angeles buyers evaluate small multifamily properties and plan the property side of a purchase. The Five-Year Real Estate Investment Plan is a useful starting point for organizing your goals. When you are ready to look at properties, share your buyer criteria and explain that you are considering buying with a partner.
Ownership, lending, and tax consequences depend on your circumstances. Speak with a qualified attorney, lender, and tax professional before committing to a joint purchase.