My friend and I are purchasing a house and I`m putting down two thirds of the down payment and she`s doing one third. We`ll both be paying equal amounts of the (bi-weekly) mortgage. The math would be easier if we were able to contribute 50-50 on the down payment but I want to put down more as I have it and as it will be our primary residence. Is there a way to calculate the ownership percentages at the exit of this property?
Have an agreement in place before you buy. What if you go your separate ways, one may want out - the other may want to keep the property.
Who is applying for the mortgage? If it is just one of you, that person is bringing allot to the table.
Going by the down payment you are putting in 33% more than she is. One might say you own 33% more; however you are sharing the debt cost. I assume you are also sharing all the other costs with home ownership.
Simple question do you need to put the extra money in?
Options
1> you own 66% and she owns 33%. This might not fly because you sharing the cost 50-50, however with your extra money you have brought the mortgage payment down.
2> When you sell you get the extra down payment funds back. However you would need to see some sort of return for that money.
3> When you sell you split the equity 66-33%
4> Determine a fair return for the extra down payment and you get that when you sell the property.
I don`t have a clear answer but this is definitely a workable deal.
QUOTE (Courtenay @ May 15 2009, 05:38 PM) Is there a way to calculate the ownership percentages at the exit of this property?
yes: cash from sale (after paying realtor and lawyer and mortgage) minus your investment each = profit !
you take 2/3 .. the other party 1/3 !
Consider though what happens if:
a) you want to sell or move but not she
b) she wants to sell or move but not you
c) either party stops paying mortgage, but other party wants to continue to own
Best would be for you to own 100% .. and use her 1/3 and pay her 1/3 when asset is sold at your option !
have a JV agreement in place. One clause should be an option to buy the other party`s share if that party wants to leave / sell ! A 2nd clause should be that EITHER party can force a sale if the other party doesn`t want to buy the share.
Could end up ugly if both have to agree to a sale and one party doesn`t !!!!
