Buying a Rental with a Friend

[Justin Howe]

Hello BP,

I have identified a property close to home that cash flows $150~ monthly after all expenses. My question is, is it a good idea to purchase a rental property with a friend? We've been great friends for 4 years, have similar goals/views in life, and are in similar financial situations. We agreed before we purchase a property together that we will outline on paper what we expect from each other as partners, who will be responsible for what, management, ect.

We plan on holding properties long term. This specific property was built in 1979 so would it be more beneficial in the long run to buy newer properties?

Thank you in advance.

[Mike D'Arrigo]

@Justin Howe 

The question I'd be asking is if it makes sense to buy a property that cash flows only $150/mth at all. That's a real slim return and just one turn over will pretty much wipe out a whole year of profit. 3 years ago would be a different story when prices were skyrocketing and you had good appreciation gain, but appreciation rates have cooled a lot and will continue to do so in 2015. Without some good upside in appreciation, I don't know if I'd get too excited about $75/mth once you split it with your friend.