Questions about having a friend as a partner.

[Greg Aloisi]

So I will try and keep this as short as possible, but let me put out a situation on here that has come upon me. I live in Fayetteville Arkansas, I am currently paying rent in a single family house. My old roommate who is a friend that graduated with me in High School moved out in August of 2020 has recently moved back and I am letting him stay on the couch for a little while, as I have newer roommates who replaced him. He was planning on getting an apartment but has been interested in getting a house because he doesn't want to throw away money by renting. I am in the same boat, ever since we started living together in the first place we were always interested in real estate investing and we are both good with our finances (both are 22 by the way). So long story short he went and applied for a loan and got approved for 70,000 because his temporary job he got is mainly for tips and they could not put that for his income in his application. So he came to me with the idea instead of having a parent or whoever cosign for him for a better loan to maybe go 50/50 with him on a house and be his cosigner. We were thinking of maybe finding a 3 bedroom house for a good price with a low mortgage and possibly renting out the other room. We obviously won't be making cashflow (and we don't care about that right now) but we think that by doing this its a good way to potentially get started and learn the home buying process while building equity and paying low money out of our pocket for the place, and either use the money saved to put into the house or save for future investments. So after all of that my question is if this is a good idea on my part to cosign with him, I am still in the learning process with all of this so does this mean if anything goes wrong in the future am I going to be responsible for things? Is this even a good idea to do at the age we are, especially this being the first property? Should I not partner in my first real estate investment? Should we not jump into this and take the next 6 months to a year to learn more? These are just a few questions I have out of many and I apologize this is so long but I would greatly appreciate the feedback as I dont like to jump into things without the proper research. Also our idea was to keep the place for a few years and rehab it over time to sell for more.

[Leigh Jones]

Found an article that pretty much sums up the pros and cons. See below. If youre willing to take the risks, I would say get the biggest house you can and rent out as many rooms as you can.  Would be cool if yall could even qualify for a duplex with 6 beds total... 

If you decide to go in together, write down ALL of the "what-ifs," who will pay for what,  and if you get into disagreements, decide ahead of time how they will be settled. Like, 1) 1 person loses their job and cant pay their share....  2) lawnmower breaks -- are you going to replace it with a $50 mower or a $3,000 mower... 3) one of you gets a girlfriend that is now spending 5 nights/week there... 4) one of you decides to move OUT or gets moved with a job... 5) are you going ti open a joint "account" to pay for all the misc expenses for the house (there will be MANY)... 6) who's going to cut the grass? Fix the leaky faucet? Buy the lightbulbs?  .... you get the picture. 

Just think of it ALL ahead of time and agree to solutions ahead of time. Then theres no question how to solve problems.