Best way to help a friend buy a home?

[Account Closed]

Hello, I qualified for a mortgage at the high end of my affordability, and closing costs may be a problem.

My friend has offered to take on 50% of the home ownership for 1/3 of the monthly costs, as well as 1/3 of the closing costs. I plan to also have a renter/housemate, at least at first. He wants to co-own the home, but make me a renter, where I pay 2/3 of the rent (or 1/3 if there is a renter), and he pays 1/3. I would be living in the home, whereas my friend would continue to live in his home in another city. 

I would love to get opinions on:  1. Whether this sounds like a fair arrangement,  2. What are other options I can suggest,  3. Advantages and disadvantage of making the home a 'rental'. 

Thank you in advance for advice!

[Bryce Jamison]

The plan you laid out isn't what I'd do in you position. Real estate partnerships can fail for many reasons. You each could have different opinions on when to sell, when to make repairs and who to use to do them, or what to charge rent. One of you could loose your job, go through a divorce, get addicted to drugs or gambling, or get in a debilitating accident. I'm just scratching the surface. Do you both have a plan for how to handle each of these scenarios and the dozens of others I didn't mention? What you're describing seems to be a friend trying to help you out, not a "traditionally" business partnership which leads me to think it's even more prone to failure. 

Do you need to buy ASAP? If I were you I'd either target homes I could afford by myself, or save up more money until I could afford the home I want by myself.

If you do decide to go through with this please, please, please get a lawyer to draw up a very detailed contract about what happens in any number of scenarios that can potentially happen between you two.