How to buy a holiday house with friends
I thought it was worth sharing this article on "How to share your paradise" which appeared in Domain recently. It's a really good piece which highlights all the steps you should take if you are considering going in with family and/or friends in purchasing a weekender.
The 9 key tips it makes for potential purchasers are:
- make an appointment with a solicitor as you need to think about the legal implications e.g. whose names are going to go on the deed of the property etc... there are lots and lots of questions you need to be clear on up front because once you buy, it's a bit too late to undo it
- have very clear ground rules and quite business-like arrangements. You can't just assume because you're good friends that it's all going to work out okay. Don't have spoken agreements between you all — agree on everything and write it down in plain English, spelling out any terms that could be misunderstood.
- seek tax advice about what the potential tax implications are to you all personally if you decide to start renting your place out when you are not using it
- keep all documents related to acquiring the property and all receipts for maintenance and improvements to the home for tax purposes
- consider opening a "house" bank account and have everyone contribute agreed amounts to cover outgoings such as power bills or garden maintenance.
- agree on how any maintenance on the house will be carried out. Will everyone contribute to a fund, pay for things to be fixed as and when it is required, or hold regular working bees?
- discuss the condition in which the property is to be left by each party when they use it
- talk about an exit strategy. What happens if someone wants to sell but the other parties don't?
- if big problems arise, seek mediation from a professional such as Relationships Australia
I particularly like this quote from psychologist and the chief executive officer of Relationships Australia, Anne Hollonds:
"Don't just assume because you're good friends that it's all going to work out okay. That's the biggest mistake people make. When you're taking on any kind of financial obligations, that sort of goodwill can dry up very, very quickly... All agreements need to be written down because there's so much room for misunderstanding and miscommunication with things, even among friends who know each other very well"
It'a a great quote - from a relationships expert! And really I think the principle that she is talking about applies to any type of business agreement, whether its purchasing a property or opening up a cafe with your best friend.
Relationships are all about managing expectations. The more effort you put in at the start to really understand your partner(s) desires, objectives and fears, the better result you will get in the end.
In 2009 I purchased my holiday house with my oldest friend. We did it for many of the same reasons listed in the article. For us it was about sharing the costs and "living the dream" as soon as we could.
Over a year into it I have to say it has been a fantastic experience. We have had some minor disagreements, I think its impossible to not to. But at the end of the day we both have a shared vision for what we want to create with the space and we are enjoying bringing our different skills to the table to make it happen.
For me our place in Birregurra is a fantastic example of the benefits of shared property ownership.
Without each of us trusting one another and being open to the concept of sharing, we would not have been able to buy the place, would still be day-dreaming about doing it one day and would have missed out on all the great experiences we have had there to date...