|Tuesday, August 14, 2018|
Consider Buying A Vacation Home With Friends And Family
You want a vacation home on the lake.
You want to enjoy summers with your family and friends.
You don’t want the financial burden of a second mortgage.
If these statements apply to you, you are the perfect candidate for purchasing a vacation home with friends and family. Lake homes are expensive and we have seen more and more group purchases in the last few years. In fact, we’re starting to think it’s the way to buy! Especially if you can navigate the buying process smoothly and openly.
We’ve included some great tips for buying with family and friends below, but if you have specific questions, please don’t hesitate to reach out to us!
Set Up a LLC
Ownership of a vacation home by two or more persons that are not married should be set up as a LLC. It is the most practical and protects each owner while still preserving the right to be taxed individually. Another major benefit to a LLC is the ability to set up a operating agreement, somewhat similar to a prenuptial, but for real estate. With this agreement and the help of a lawyer, you can document everyone’s ownership percentage as well as other details specific to the property, like maintenance, who manages the property and more.
Create a Schedule
If you’re buying the vacation home with the understanding (and agreement) that everyone is welcome at any time, then you don’t need to worry about a schedule. However, if you all agree on splitting the year by choosing dates for each owner, do this well in advance so that everyone is on the same page.
Set Ground Rules
While you may have the home set up as a LLC, there will still be opinions about minor details and decisions, so it’s best to go over these things prior to signing on the dotted line. One must-have discussion is that of “who is welcome?” While you may not want guests staying in your home-away-from-home without an owner present, others may not feel the same way.
Another topic of discussion should be house rules. You may be unpleasantly surprised to open the door to a smelly garbage or a sink with dirty dishes. Make sure you discuss the ground rules of the house in detail and never assume someone is on the same page without talking about it first. This mindset will help avoid conflicts and frustrations.
Decide if Renting is Right For You
If there are times that the house will not be used, you may consider renting the home out. Keep in mind, this brings about a whole new dynamic to the home. However, if you and the other owners are all in agreement, renting can be a great way to bring in some extra cash to put towards repairs and updates. It’s also helpful for paying down the mortgage! Consult a lawyer before heading into the rental realm and make sure everyone is on the same page.
With the right planning, and of course the right people, buying a vacation home with friends and family can be the perfect solution to your lust for a lake home!
Call us to find a vacation home today! 218-820-7355.