Co-buying a house: How platonic partners make it work

By ABBY BADACH DOYLE of NerdWallet

Seven years ago, Phil Levin and his girlfriend, Kristen Berman, pondered a common question: Should we move in together?

Levin assumed they’d take a predictable path and find a more affordable apartment outside of pricey San Francisco. But Berman, a behavioral scientist, shared her reservations about leaving their friend network – and some facts to back it up.

“All the behavioral science research shows that that’s one of the worst things you can do for your happiness,” Levin says.

Instead, the couple rented a Victorian-era mansion in San Francisco’s Hayes Valley neighborhood and invited nine friends to move in. Today, they co-own a multiunit property in Oakland, California, called Radish, which houses 17 adults and two infants.

It took some effort to find the right property and figure out finances. But the now-married couple couldn’t imagine designing their life — or raising their daughter — any other way.

“Being able to have this extended family of ‘aunties’ and ‘uncles’ close by has been wonderful,” Levin says.

Many co-buyers operate on a smaller scale. But no matter the size of your group, co-buying requires extra planning and paperwork. If you’re willing to get vulnerable about your finances and long-term goals, the payoff of companionship can be worth it.

<p>An advertising sign for building land stands in front of a new home construction site in Northbrook, Ill., Wednesday, Sept. 21, 2022. From rising home prices to soaring interest rates, it’s a daunting time to be a home buyer. To achieve homeownership, some single buyers are trying a different approach: co-buying with friends or family members. But co-buying isn’t a short-term hack – it’s a lifestyle shift. Before you team up, experts recommend having vulnerable conversations about your finances and long-term goals. If you have patience to navigate the obstacles, co-buying can be a uniquely satisfying way to own a home. Plus, for those who are single, the investment comes with an inflation-proof dividend: companionship. (AP Photo/Nam Y. Huh)</p>

Nam Y. Huh

An advertising sign for building land stands in front of a new home construction site in Northbrook, Ill., Wednesday, Sept. 21, 2022. From rising home prices to soaring interest rates, it’s a daunting time to be a home buyer. To achieve homeownership, some single buyers are trying a different approach: co-buying with friends or family members. But co-buying isn’t a short-term hack – it’s a lifestyle shift. Before you team up, experts recommend having vulnerable conversations about your finances and long-term goals. If you have patience to navigate the obstacles, co-buying can be a uniquely satisfying way to own a home. Plus, for those who are single, the investment comes with an inflation-proof dividend: companionship. (AP Photo/Nam Y. Huh)

KEEP AN OPEN MIND

In the National Association of Realtors’ 2022 Profile of Home Buyers and Sellers, a record-high 5% of first-time home buyers were “other household compositions” – that is, something different than single, married or coupled.

“It can be a great situation, and a way to enter the market that they wouldn’t be able to enter otherwise,” says Don Koonce, a real estate agent in Seattle who has helped dozens of co-buyers during his eight years in real estate.

Many co-buyers Koonce has worked with are platonic friends who have been living together for years. But they’re as diverse as the types of homes they buy, which range from traditional single-family homes to condos and duplexes.

The right home depends on your group’s size and tolerance of personal versus shared space. Houses with basements work well for separate living spaces, Koonce says, or you could remodel.

Recently, Koonce helped a mother and daughter buy a split-level that they renovated into two distinct units, including separate kitchens.

“It was beautiful,” he says. “I don’t see any problem with a resale on that, because somebody could rent it out.”

STRESS-TEST YOUR RELATIONSHIP

Even for family members or experienced roommates, the financial commitment of co-buying raises the stakes.

Ashley Agnew is a n investment advisor and financial therapist with Centerpoint Advisors, a wealth management firm in Needham, Massachusetts. When working with co-buyers, she role-plays worst-case scenarios to “stress test” the relationship, such as how they’d handle major home repairs or theft.

“You really do have to get a little bit financially naked with the person that you’re buying with,” she says. “There has to be a lot of transparency.”

Agnew always recommends that co-buyers seek legal counsel. An estate attorney can draft a cohabitation agreement — something that’s not just for romantic partners, she notes. That way, all parties know what to expect if someone wants out of the homeownership commitment.

“It’s almost like running a minibusiness, especially if it’s not a coupleship,” Agnew says.

An estate attorney can also help co-buyers understand options for titling the home, such as joint tenancy or tenancy in common. Each arrangement has pros, cons and legal obligations.

FIND THE RIGHT RESOURCES

To move your plans from dream to reality, it’s essential to find a lender that is familiar with — and supportive of — co-buyers’ unique needs. That’s often the first hurdle, Koonce noted. Some realtors hesitate to work with co-buyers, too.

“It’s a lot more paperwork,” he says, “and a lot more coordinating and getting people to agree.”

To provide better service, Koonce earned a professional certification established by Seattle-based real estate startup CoBuy. The company offers education for real estate agents, attorneys and lenders, as well as services for co-buyers themselves.

After establishing Radish, Levin found his inbox flooded with questions about co-buying and co-living. The interest exposed an information gap: People craved trusted guidance on how to do this successfully.

So in 2020, Levin teamed up with close friend Gillian Morris to co-found the Substack newsletter Supernuclear. It provides advice, templates and tools to navigate common challenges of co-buying and co-living.

“We didn’t invent this concept,” Levin says. “We’re sort of standing on the shoulders of other people, so there’s sort of a pay-it-forward element where we wanted to have other people experience the happiness and meaning that we’ve gotten through this.”

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METHODOLOGY:

In July 2022, the National Association of Realtors mailed a 129-question survey using a random sample weighted to be representative of sales on a geographic basis to 153,045 recent home buyers. The recent home buyers had to have purchased a primary residence home between July 2021 and June 2022. Respondents had the option to fill out the survey via hard copy or online. The online survey was available in English and Spanish. A total of 4,854 responses were received from primary residence buyers. After accounting for undeliverable questionnaires, the survey had an adjusted response rate of 3.2%. The sample at the 95% confidence level has a confidence interval of +/-1.41%.

National Association of Realtors. (November, 2022). “Highlights from the Profile of Home Buyers and Sellers.” https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers

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