If you’re thinking about buying a duplex with a friend, spouse or family member, the single most important thing to discuss isn’t cash flow, rate of return, or how rich you’re going to get from investing in duplexes.
The single most important thing to discuss is how you’re going to get out.
But why? Nobody ever fights, changes plans, gets sick or loses a job, right?
No matter how well intentioned we are, or how much we love the person we’re buying a duplex with, the sad fact is things happen. And the only chance we have of preserving not only our investment, but far more importantly, our relationship, is to have a pre-determined understanding of how we can exit if we need to.
It’s the conversation none of us wants to have. Nonetheless, it needs to happen.
Be sure to talk about how you’re going to take title or ownership. Will you be joint tenants, where if one party passes away, the other automatically inherits the deceased person’s half? Or will you take tile as tenants in common, where you can sell or will your share to an outsider or your heirs?
What if you get a job in another state? Will you sell? Trust your partner to manage the duplex in your absence?
What if one of you just needs her money out? Will the still interested duplex owner agree to list the property? Buy your share?
Once you’re ironed out the details of duplex ownership, it will cost you several hundred dollars to hire an attorney to put your agreement in writing. Always put it in writing. It will help each of your remember what your undertanding was when you bought the duplex, and preserve your friendship when it comes time to sell.