5 Reasons Not to Purchase Properties with Boy or Girl Friends

With the roll of traditional marriage ever changing these days, many people are opting out of getting married all together. This puts many, many couples (boyfriends and girlfriends) in an interesting, if not precarious position, as they look at purchasing real estate together. There are several things that boyfriends and or girlfriends should consider before they take the big plunge and buy real estate together. While I am not a lawyer I did buy a 20 unit town home complex with my girlfriend a couple of years ago and I thought that I would share with you some lessons that I learned.

1: Their credit past can raise its ugly head to bite your credit rating in the backside. Be sure you know, in detail what their credit background is. If they have credit issues that they may have hid from you, they will now be linked with your shared asset. Past creditors or even the IRS can place liens on the property for redress and now your part of the asset can be lost to cover their past errors.

2: Who did what and who owes whom? No matter how careful you are at keeping track of who did what on the project, who paid how much for what on the project or how much something is worth, there will undoubtedly be differences of opinion and can lead to relationship and business conflict.

3: Splitting the profits. I know you probably would have not been able to buy the property without the help of your boy/girlfriend; otherwise you would not have been so foolish to partner with them in the first place. But since you now have them in the property with you, you can look forward to splitting any profits with them at best, right down the middle. For example in rental properties the property may be bringing in $4,000 a month, but by the time you pay expenses and then divide what’s left by 50% it is often not even worth the time, effort, risk, stress and increased liability that the partner brought to the table.

4: By partnering up with a boy/girlfriend you give up much of the decision making freedom that you enjoy as a sole owner. Decisions of to remodel or not, or put a new roof on or not, or what you should charge for rents to your tenants now have to be managed through negotiation with your boy/girlfriend. This can lead to ongoing monthly and even daily conflict and negotiation.

5: If your relationship fails for whatever reasons, you now are linked to that person you want to get away from by your property. So rather than being able to make a clean break and move on, you will have to sell or refinance your property to pay off your partner or yourself. This puts a less than favorable pressure to sell on the property and you may end up letting it go for less than your would have sold it for if you did not have the added pressure of fleeing a bad relationship.
I know you are all thinking that all of these points can apply to married people purchasing property together as well, and you are mostly right. Because of the slightly more transient nature of boyfriends and girlfriends there is a more elevated risk to buying real estate than there is with married couples.

Having said all this I would have to say that there is no substitute for owning your property as a sole and separate person, owning it out right, free and clear and all yours. Unfortunately, for many of the reasons listed above; I must now put my property that I bought with my girlfriend on the auction block and put it out there FOR SALE!!! ecox