A bad property manager is another headache and then you have to fire and replace with a better one. Be sure to ask around and hire someone GOOD! They are NOT all the same!
Some folks have recently had issues with homeless deciding to occupy vacant dwellings in residential neighborhoods which is another possible problem that needs to be considered and prevented.
On the other hand, H says if he were to do it again, he’d still buy property with carefully selected friends for investment only.
If you buy a place together and each are entitled to certain weeks, be sure to discuss and agree whether or not anyone can AirBnB their unused weeks. It could be a fantastic way to cover expenses or a horrible betrayal, depending on your set up.
Many eons ago my great-grandfather, grandfather and three of my grandfather’s friends bought an old logging camp in Vermont. We do selective logging to pay the real estate taxes and pay for upkeep on the roads and the one cabin that belongs to everyone. There are four (soon to be five) other camps on the site. My mother and her sister inherited one of the camps. It’s not taken care of by my generation - there are seven of us. It’s pretty primitive, not on the electric grid, no running water in the winter, but it’s I don’t recall any fights or major disagreements about improvements and repairs regarding the cabin. The property itself is run with a shareholder structure with an annual meeting and a Board of Trustees who do most of the hard work. I’ve been on committees from time to time. It’s an amazing gift that my grandfather gave us. We love it.
We also inherited a place on Cape Cod. My mother died just before getting pressured into signing an agreement to giving it to the local land trust on some arrangement where we’d have use of the house for a set number of years. My brothers and I refused to sign the stuff until we got a clearer picture of the finances. I know what my aunt wanted, but from a meeting with all the heirs and the lawyers I am not all convinced that she listened to the sense of that meeting at all. It’s been in limbo for a couple of years. Unfortunately it is a money pit as far as I can tell. It would need serious updates to improve it. Personally I’d spin off a couple of properties on the road to lower the taxes, but it would give my aunt a heart attack to see that happen.
Anyway, I do think this stuff might work, but you have to decide up front what you want to do if someone needs to get out of the agreement. This book is a good one to read before you talk to the lawyers: https://www.amazon.com/Saving-Family-Cottage-Succession-Planning/dp/1413323499/ref=pd_lpo_sbs_14_t_0?_encoding=UTF8&psc=1&refRID=CEF4XX0CA5AC01QKET42#reader_1413323499
@mathmom beat me to it. Saving the Family Cottage would be well worth reading. It’s specifically for families who have real estate they want to deed or set up in trust to heirs…but the suggestions in it would help here too…in terms of ideas for stucturing this.
Still…I would say…don’t do it.
@mathmom and all: Thanks for a lot of valuable things to think about. I don’t have much to add but this is a very valuable thread for a few of us (myself included).
For those of us who have a cottage that we own ourselves, these issues still come up if we want to leave the cottage for example to our children. What happens if we are gone in 20 years, then 30 years from now one child wants to sell and the other doesn’t? What if one child ends up doing all the maintenance and the other doesn’t help?
Things will go wrong with a vacation home, and over time both money and effort will be needed to set things right.
Get that book @mathmom suggested…really it’s all bout folks like you who think it would be wonderful to leave the family cottage to your offspring.
In our family, the elder parents wanted to create a trust with this property…and that is what they did. They could have done so without asking any of us if we wanted it…or not. Luckily, they asked. DH and I posed a bunch of questions over a six month period about many of the issues being posed on this thread. My inlaws chose not to answer our questions…which was their choice. DH asked to be removed from the document…and therefore as a cotrustee owner of the house.
We have NEVER regretted our decision to NOT be involved. Those who are trustees of this property all have regrets to a greater or lesser degree. In addition, the way the trust was written, at age 21 the bloodline became full beneficiaries which meant that they were entitled to use…and presumably would help with expenses and maintenance.
There are 9 grandchildren and 5 adults now who are full beneficiaries. Simply put…there are not 14 weeks when this place can be used. It is only available to the beneficiaries from June 30 to Labor Day…because my MIL maintains use in June and September…and it’s really a summer cottage.
The younger beneficiaries have not assumed financial obligations at all at this time.
If you choose to do,this…make sure you put in some provision for when you get a bit older…and can’t really do things like get on ladders to clean gutters, or put deck furniture out…or whatever.
“In addition to figuring out what to do if something goes wrong…”
Go read post 5 again. Rinse. Repeat.
Not IF but WHEN something goes wrong. And it isn’t all just property related…it’s every entity involved and their situations–personal finances, change in focus, health. o
Got friends who went in on vacation home with 3 other couples. Great time until one wanted out and his brother took his place (who is fine but can’t afford it either). One couple ends up with general maintenance (good sports but they are beginning to resent it). Every room decorated differently from very nice to sparse at best. They’ve all finally agreed to sell but having trouble finding a buyer. Never again!
I own VACANT property (inherited) with sister whom I love dearly but I’m ready to sell and she wants to sit on it. Not happy but it isn’t hurting me. Don’t think she could buy me out so that’s not a solution I’ll take. I dislike having to deal with others (except H) to make financial decisions so while I can understand the lure of owning vacation property with others to split the costs I would never do it. (By the way, we HAVE owned boats with friends which worked fine–boats and vacation homes aren’t the same.)
A few hundred$ spent on a consult with a knowledgeable attorney will save a lot of headaches and thousand$ later. Make sure the attorney is well-versed in both partnership and real estate law.
Make sure all of the parties to the sale meet with the attorney at the same time!
You don’t want miscommunication or a “he says, she says” situation.
My family has a desert cabin in a large canyon that can only pass down through family, never sold. If a family decides to relinquish their cabin it has to go back to the non profit club.
I have enjoyed this place my whole life, but when my mother passed away the technical membership passed to “oldest male” which is my cousin. There is a huge difference in cleanliness standards between us, and his wife thinks decorating is transferring old crap out of her house, plastic flower arrangements and all. My enjoyment level has deteriorated because I dont want to spend my weekends scrubbing everything. Unfortunately it is too remote to hire a cleaning service or a property management company and my cousin does not understand the issue. So my usage has been limited lately
our “partnership” issues are more around different standards of cleanliness and decoration and I cannot see any way around the issue. My cousin thought I was crazy overboard when I hired a cleaning crew about 5 years ago.
“Make sure all of the parties to the sale meet with the attorney at the same time!”
If there is a chance the partners could become adverse in the future, the lawyer could be in violation of some ethics rule if she implies that she represents each partner individually. Usually, in such cases, as I was told, a lawyer would agree to represent “the deal” - the partnership/RE business but not any individual involved in the transaction. If any partner wants additional, personal legal advice, they will need to seek their own attorney.
My wife and I used to take vacations with family and friends which tended to not work out due to previously unknown or changing interests/demands that would suddenly arise. I can’t imagine buying a house with friend, even best friends, as I foresee similar surprises/changed circumstances arising. In addition just because people have a nice house, car etc, doesn’t mean they are financially stable to afford this jointly owned property. Will the friends allow others to look into their financial situation. You’re making an investment, shouldn’t you do your due diligence. I enjoy partying with my friends, but I’m not sure I would want my friends poking their noses into my financial affairs. I’m not sure any agreement could foresee all the “what ifs…” that would arise. Although I see an upside, I see more downside.
Lawyer, lawyer, lawyer. But I would run far away from this idea! Rent a house with these friends and go to a different place every year. You’ll have more fun and keep your friends.
I had to take 2 aspirins to read this thread.
@DadTwoGirls …we own a small cottage and have two young adult kids. They’ve grown up with us having it. We always thought it would be great to leave it to them, up until I read articles about how it actually can hurt the sibling relationship terribly. I can see that with ours. One runs things into the ground and just doesn’t care. The other is fastidious and neat. I already see problems arising and when the time is right, DH and I will sell. I don’t foresee them wanting to spend the money on real estate taxes, boats, storage and delivery of said boats, pier cost in and out…maintenance of a 2nd home. Unfortunately, I think it will just be pleasant memories for them. It sort of makes me sad.
I’m with Massmomm–We’ve often done this with friends for joint vacations and rentals. We get a group together, appoint someone to handle the money and everyone puts in the money in advance to cover the trip. We add extra to cover shared meals etc. It’s always been a ton of fun with a limited cash outlay. And limited time.
If someone has to cancel we’re usually able to totally refund their share but it’s considered “the chance you take” (especially for rentals) because things have to be done in advance. Nobody is putting in money they can’t afford to lose.
Vacation homes should not be bought if you can’t afford to lose the money. And while YOU may be able to afford it, others may not. You have to be able to saddle the entire thing if it goes south.
I would hope no one considers buying property jointly with someone they don’t know well enough to know whether or not they can afford it barring something so extreme it is totally unexpected.
I have known people over the years who have done this successfully. A few things to share:
Keep a household account for routine expenses. Consider making monthly deposits so the account gets built up a bit.
Certainly consult a lawyer who has expertise in this kind of real estate law. (One family I know wrote into their agreement that ownership would not pass on to heirs, primarily because it gets so complicated with multiple children, etc…Just sell the property OR other owners buy out the estate.)
Divide the calendar year into weeks–similar to time-share weeks–and assign weeks to the various families. Perhaps pull out the prime weeks and draw those separately so there is some equity of usage. If it’s a ski property those prime weeks would obviously be different from a beach property…
@BunsenBurner yes…you are correct. But if these co owners are planning to use a lawyer to set up the other ownership deal…they need to ALL be there to discuss the set up. Not one owner, not two…but ALL.
Otherwise…there is too much opportunity for miscommunication on the deal.
Once the deal is written up…yes…each owner should have this contract reviewed separately by THEIR own lawyer.
BTW…that’s another reason we declined to be part of our family real estate trust thing. Inlaws flatly refused to answer our questions and also flatly refused to allow us to look at the trust document with DHs name on it…and liabilities for the bloodline dependents forever.
We just said …no. Thank god they removed us…which really, they didn’t have to do.
I actually know 3 couples who did this maybe 6 years ago…it’s one piece of property, with 3 homes…they vacation there now but the idea is to retire together…completely from the outside, they seem to be doing great!
But one thing I"ll note if your children aren’t yet in college…my husband and his 3 siblings brought a condo for their aging dad but the property was put in our name (we had good credit and the condo was in our city) and the other 3 paid us the downpayment account. When it came time for financial aid for kid #1, the townhouse was seen as a 2nd house and it affected the financial aid that we were able to receive.