Two detached character homes on one prime lot listed now.
Imagine you could solve for the Missing Middle?!
We all know this: there aren’t enough functional homes for families and working folks in the GVRD. Enter Co-Ownership & Property Investment Partnerships!
It may be time to share a property with someone. The sharing economy is quite literally at our doorstep in the Greater Vancouver Area.
Experienced in these types of transactions, I want to show people this can be a happy, mutually beneficial arrangement for many types of would-be homeowners or investors. It can provide access to new classes of investment and build interdependent community partnerships between people with similar goals and lifestyles.
What if you could set up a thoughtful, functional partnership where you live in part of a home or property and pay for part of it? What if you could share in the costs, maintenance and equity building of life’s most important asset?
Better together!
Successful partnerships come in many forms. There are all types of people who can benefit from sharing in co-ownership. The most essential part of its creation is deciding on the exit strategy together.
EXAMPLE 1: Two couples opt to share a property with two detached or attached dwellings on it. Just like living in a duplex, but without the strata plan or separated titles and mortgages. They form their own plans and agreements that best reflect the interests of all with a lawyer and register it on title upon Completion of the purchase. Their kids play together in the yard and they happily share in the upkeep of the property.
EXAMPLE 2: Two businesses or holding companies may want to invest in a rental property to diversify their assets, on a limited budget. Partnering on a property would allow for a much different investor experience when it comes to land management, equity accrual and rental control. This property may have one or two suites to occupy.
EXAMPLE 3: A millennial couple partners with their parents to buy a Vancouver Special / BC Box / Bungalow home, in order to get two adult couples the one level layouts they need, located in the walkable communities they love.
EXAMPLE 4: Two downsizers need to cash out in retirement, but want to stay in their long term low-density community, but the middle is missing! Both of them want 3 bedrooms, a quiet patio and ground access without 3 sets of stairs. Time to customize the splitting of a house!
EXAMPLE 5: One friend/colleague/sibling has some cash to invest in a down payment. Another needs a home to live in and can afford the monthly payments but would prefer to be an owner and stop renting. They combine resources to create an equitable partnership where everyone wins.
The Steps to Partnership
- TRUST FIRST – If you start with a foundation of trust and generosity of spirit, the rest is easy. Some people are well suited to sharing housing, and others are not.
- GET PREAPPROVED – All partners will need to engage with a mortgage broker together to secure the necessary financing for the property. The amount of mortgage the parties will be qualified for depends on their total combined income, liabilities, and down payment. Seeking a mortgage with your bank or broker comes at no cost to the buyer and should be one of the first steps towards any housing purchase. It’s not as simple as adding everyone’s budgets up. Get financial advice well in advance of shopping. These types of mortgages can be challenging to secure, if financial backgrounds are complex. Vancity Credit Union is at the forefront of providing pathways to this type of non-traditional lending.
- A LAWYER-MADE PARTNERSHIP AGREEMENT in place is the next step to a safe co-housing situation. It generally costs around $2000 in addition to your property closing costs of approximately $1500. A lawyer will take about a week to prepare it. You and all partners should convene with a lawyer and discuss your needs in advance of writing any offers to purchase. The partnership agreement is then made custom for you depending on your specified shared arrangements. Ideally, you would start creating the agreement with a legal professional prior to house shopping; then customize and finish signing it during a subject-condition period contained within your purchase contract – so that the agreement is specific to the type of property you choose. The initial lawyer meeting will draw out many of the complicated discussions you and your potential partner will need to address prior to engaging in a purchase together.
- EXIT STRATEGY is the most important thing to agree to in your partnership agreement. What happens when one partner must move on? Can just their share be sold? Who can they sell it to and when? How long do they have to find a new partner before the property goes to market for everyone? Other things outlined in the agreement might be regarding access, administration, costs and maintenance of the property.
- Once you have thoroughly discussed all of the possible outcomes of this partnership with a legal professional, and you have been pre-approved by a mortgagor; you can start shopping for a property with a real estate agent.
- WRITE A PURCHASE CONTRACT with all partners on title. Upon completion of the transaction you can arrange the ownership into a custom ownership structure. 50/50 is easiest for everyone, but fractional ownership can work too. You may want to do this if people have differing incomes or living space needs. A home may have a lovely 2 level upper suite and a small basement suite. The upstairs owner could pay for 70% of the home, while the basement dweller pays for 30%. It’s simple enough to arrange a partnership in the way that suits you best.
- During the subject-condition period of the offer – you and all partners will solidify the partnership agreement customized to the house you have offered on and secure an adequate mortgage.
- HOUSE RULES can be made to live by. This can be something akin to a strata where you construct your own bylaws and land use plan. EX: Who uses what yard space? Who maintains whose yard? Who pays for which renovations? Are sublets allowed? Who handle recycling duties?
- If you have done all of this due diligence in addition to your other required subject conditions, and still feel trusting of your potential co-housing partner, then this is something that could be really functional and meaningful for you.
Call me if you have any questions!
Willo Jackson PREC* – 778-554-9557