Friends With Benefits. Millennials and Gen Z-ers Are Buying Homes With Friends To Get On The Property Ladder

Friends with benefits? Mixing business with pleasure is never usually advised, but given the high cost of getting on the property ladder, that’s exactly what millennials and Gen-Zers are doing to achieve home ownership.

According to Bankrate’s 2024 Down Payment Survey, over 50% of respondents said that finding the cash for a downpayment was out of reach. Thus, more and more people are pooling their resources with friends to own a home — or part of a home. Zillow reported that 14% of homebuyers purchased a house with a friend in 2023, though the number fell to 7% in 2024. The home didn’t always refer to a primary residence but could include an investment such as a rental or flip. 

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Non-spousal Co-Home Buying and Multigenerational Living

Websites such as Cobuy and Nestment help simplify the non-spousal co-home buying process. In addition, multigenerational living has also been on the rise. The increased cost of living means living with retired parents could be a cost-cutting endeavor for all concerned. Pew research found that a quarter of U.S. adults ages 25 to 34 resided in a multigenerational family household in 2021, up from 9% in 1971. As with co-buying amongst friends, housing prices have fueled the increase in multigenerational households.

A 2023 paper from the Wharton School of Business at the University of Pennsylvania, found nearly half of adults aged 18 to 29 live with their parents, up from about 25% in 1960. The stats emulate numbers last seen during the Great Depression era.  

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Planning Ahead

While living with family members may engender family squabbles, living and buying with friends can bring about entirely different issues that can complicate finances and cause friendships to end. 

The Wall Street Journal offers some of the following tips if you intend to buy a property with a friend:

Set Expectations In Writing

Use a lawyer to draw out a contract stipulating dividing expenses. 

Vacation Home Use

Many friends buy vacation homes together with the idea that each can use it. In these instances, the expectations are typically:

• Is each owner responsible for having the home cleaned after they use it?
• Who gets to use the primary bedroom if multiple owners are present simultaneously?
• Can the home be used for Airbnb guests?

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Repairs and Responsibilities

• Who is responsible for repairs and improvements?
• How will bills be paid?
• How much of the rental income’s cash flow will be re-invested into improvements?

Have An Exit Plan

• How will each owner exit the property? Do the other partners have the option to buy them out? If so, how will the property be evaluated?
• If parents are leaving a property to their heirs, how are they passing it on? A trust, a sale, or probate? If there are multiple heirs, can they rent the property for income?

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