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The property ladder was one I wanted to be on but seemed out of reach. There are many ways to get a leg up, like receiving gifts from family, having a guarantor, buying with a partner, or moving in with family to reduce costs and maximize income. However, what if these options are unavailable, or already being utilized? What then?
If you are a first home buyer in a similar situation, have you considered embarking on this journey with a friend? It involves compromises, tough decisions, legal agreements, and that memorable first night's dinner in your new home, eating takeaways on the living room floor. Yet, the sense of accomplishment is unparalleled.
For me, this is my story.
I have been a full-time worker since the age of 18, saving as much as I could to invest in the share market and ultimately purchase a home that could contribute to my financial future. (Dreaming big was instilled in me as a child.)
I wanted subdivision options without compromising the stability of the house. While I was willing to consider locations further away, a 90-minute commute over the Remutakas proved to be too much. A decent kitchen and bathroom were also priorities, since my skills and renovation budget were somewhat limited.
TradeMe's search function became my reliable ally. However, houses within my price range consistently fell short of meeting my checklist. I struggled, became discouraged, and witnessed the rapid rise in house prices.
In 2021, at the age of 21, I became serious about my home-buying aspirations. I initially explored the option of saving more by waiting, but it became increasingly challenging to service the mortgage on my own. Even with flatmates occupying the remaining bedrooms in the potential house, there was a limit to how much rental income banks would consider when calculating affordability for an owner-occupied property. Consequently, proving my ability to handle a $700 weekly mortgage payment proved futile.
My family, who graciously allowed me to stay at home in central Wellington for a mere $50 per week, were unable to assist me further with the actual purchase. Once again, I hit a roadblock.
During this time, I engaged in discussions about houses with anyone who would listen. I even dragged my sister and countless friends along to open homes when attending alone seemed daunting.
Within a year, I swung from considering buying a central city apartment to looking at a freestanding house on a suitable plot of land with potential for capital gains, renovations, and subdivision.
It was only when I had clearly defined my desires that I began to attract friends who were interested in co-purchasing. This allowed me to find someone who shared the same goal and enabled me to stand firm on my preferences, as I had thoroughly contemplated what was best for me, what was attainable, and the role I envisioned for the other person.
Questions swirled in my mind as I searched for someone who aligned with my answers. Are they going to live with me, or is it purely an investment for them? Do they envision a long-term commitment, a quick flip, a steppingstone, or a starting point?
If you find yourself in a similar position, my biggest advice would be to do the necessary introspection before considering potential partners. Clarify your goals, timeframe, and the bigger picture. Essentially, ask yourself why you are buying a house and what type of property would best suit your objectives.
In my case, the perfect person turned out to be a friend of more than five years, with whom I had worked full-time at two different jobs. We knew each other well and chose to remain friends, which could be considered passing each other's test!
We had numerous discussions, delving into finances, exploring listings, and debriefing after open homes. The house we ultimately purchased was one I had initially visited with my current partner, so the real estate agent was quite surprised when I arrived at the private viewing with another woman!
We approached everything just like a romantic partnership would. We discussed all the details, ensured we both understood the paperwork in front of us, trusted each other's decision-making in areas of expertise, and made the process as enjoyable as possible. Celebrating with ice cream after visits to the lawyer, brainstorming sessions, and researching council regulations on backyard farm animals—these were all part of the excitement!
We agreed on fair below-market rates for the bedrooms we would occupy ourselves, and any remaining costs were split evenly. I took charge of reviving the gardens, while she purchased half of Kmart's inventory to organize, decorate, and liven up the interior. I couldn't have asked for a better first home story or a better person to share it with.
Some paths are indirect, some are bumpy, but some lead you to your desired destination with a smile on your face. While having full autonomy over the house I own would be nice, without Blair, I wouldn't even have half a house. Therefore, it's important to put expectations into perspective.
So far, our only arguments have been about paint colors and the hair in the shower drain, or whether to have a fig tree or an avocado tree... but with trust, everything falls into place. We compromised and got both, by the way!
If you find yourself in a similar situation, seriously consider the option of co-ownership. It is not something to fear, as friends are the family we choose, after all.
Ben.
About Ben:
Hi, I'm Ben, a Broker Support for Caveo, our Fire & General insurance arm at Velocity Financial. My main job is helping Joshua find the best cover for your situation, whether you've got a large portfolio, getting that first home, or bought a car - we will guide you through the process of protecting it, making sure it, and you, are looked after. Whether you work best by reading over things, or talking over coffee, I love taking the time to chat and explain things, so that you can be reassured that you've got the right cover for everything life throws at us. When I'm not working, I'll either be found riding my Kawasaki, out in my kayak, running trails, or packing the car for my next roadie. My friends will say I love talking about these just as much as I like doing them, so I'm always ready for a good walking track recommendation if you've got a stunner.
Disclaimer: Before you make any decisions, discuss your situation with an adviser from Velocity Financial, and seek advice from professionals, such as a lawyer and accountant, to find the best solution for your unique situation.