Is buying property with friends and family a good idea?

ON face value, the notion of pooling your financial resources with family or friends in order to buy a property makes perfect sense.

It immediately increases your buying power, and for many first home buyers, it’s potentially one of the only ways they can afford to get into the market.

The attraction of buying with another person is obvious: it reduces how much you’ll personally need to save in order to purchase a home, and increases how much you have to play with as you enter the market.

Parley Property Advisory director Luke Assigal says it’s a very viable option for many buyers who otherwise wouldn’t be able to afford it.

“There are benefits – you combine your borrowing power, so you can buy a lot more,” he says.

When people buy a property as an investment, many do so with the intention of using the equity in that property to purchase another one in the future.

But beware: if you’ve bought a property with someone else, lenders will calculate your debt based on the full value of the house.

Assigal says it’s a scenario that often catches people out.It’s critical that both you and your family member or friend are clear from the start about your goals for the property you’re about to purchase, and that those goals align.

There’s no point in buying a property together, only for one party to want to sell up 18 months later, when you’d really hoped to hang onto it for 10 years or more.

— realestate.com.au