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October 6, 2009

Buying 3-Family w/ 2 Others

Any advice/recommendations on how to purchase a 3 family brownstone with 2 other people? There is a garden duplex with a basement and 2 floor through apartments. The purchase price is $1M. My husband and I intend to live in the duplex. Cousin will have one of the units for rental income and another family member will have the third unit to live in. How do we divide up the ownership/costs? Plans are to finance it together...Thanks for the input

Author's Comments

I am so grateful for all of the comments. This is immensely helpful.

For expediency sake it looks like TIC makes most sense for us at this time. Condos would ultimately be ideal, but I hear that this takes a lot of time and is expensive...maybe down the line. From what I understand about the financing, all 3 parties will be responsible for the mortgage. Each will have their separate contractual share(based on %ownership), but if one persons share does not get paid it adversely affects each owner. Is that correct?

The question of how to divide the property: Noted that this is agreed upon between the individuals. Any input as to what is fair? The garden apartment as it stands is the only unit that provides access to the backyard. However, it could be used by the others...
Was thinking something along the lines of 50/25/25 or 54/23/23. The garden apartment owners will be contributing to the greater share of the down payment(80%)

Posted by: blilly3 at October 6, 2009 4:37 PM in response to Buying 3-Family w/ 2 Others

Responses to Author's Forum Comments

I'm going into this with the expectation of condo-izing say within 5 years, as we will be living in the space and time is of less concern.

All parties may be on the mortgage, and will be on the deed. Total trust is necessary. If one person defaults, the others can sue him, but from a practical viewpoint, have to shoulder the burden. Make sure you have a contractual agreement not to "burden" the property (ie take out a II w/o telling others!)

Everything else like % division, who gets the garden, is trivial...or personal, which may not be the same thing.

Good luck.

Posted by: cmu at October 6, 2009 9:38 PM in response to Buying 3-Family w/ 2 Others