So You Want to Buy a Home With Friends — Now What?

This story is a part of our Family Home Issue, where we dive into what the family home looks like today, plus how to make any living space work for you. To learn more about multigenerational living, preparing for a new arrival or buying a home with friends, check out our full issue here. 

Buying a home is a large investment, and to help lessen the cost, co-buying with a spouse or family member is common practice. But what about buying with a friend?

Alecia Pillatos, a real estate broker and a growth advisor at Zillow, knows what that's like. She bought her first home with friends in 2008 when she was only 21 years old.

"I think when it comes to buying a home, the thing that I've noticed the most with people that are successful or less successful in life is really a fear factor," Pillatos says.

One in seven homebuyers have co-bought with a friend, according to a 2023 Zillow home report, Pillatos among them. Kristina Modares, a real estate agent and co-founder of the brokerage, Open House Austin, says this practice helps younger people buy their first homes.

"Instead of getting married and having kids in their twenties, like our parents, we (millennials and Gen Z) tend to do this in our thirties and even forties," Modares says. "Since after getting married was when people typically bought homes, younger people now need to know that they can still do this in their twenties alone, even if they are not married."

Among non-homeowners, more than one-third (35%) say that in order to afford a home, they’d be willing to split the purchase with someone other than their romantic partner, according to another recent study by Intuit CreditKarma. When looking at Gen Z alone, that willingness jumps up to 59%.  

But what should you know before taking the plunge? We break down everything you should consider before signing on the dotted line.

Clarify Your Goals

Before you start looking at homes, make sure you and your buying partners are on the same page.

"What is your larger vision for where you live, your finances and your quality of life?" asks Stephanie Douglass, a real estate agent and other co-founder of Open House Austin. "If buying with a friend fits into that vision, start thinking about people in your life you can see yourself working or living with."

When thinking about friends who might be a good fit, Douglass stresses the importance of finding someone with similar goals but also "a compatible communication style."

"Everything should be decided prior to purchase so you don’t put yourself in danger of losing your friend over a disagreement that you haven’t discussed," Douglass says.

Write an Agreement

Douglass recommends a detailed operating agreement written by an attorney to outline any possible scenarios from renovations to someone wanting to move out. Think of it as a home-buying prenup, and don't skip any difficult conversations.

"An operating agreement should include all of these scenarios, from someone moving out to, morbidly, someone dying," Douglass says. "How is everyone paid out, what happens if you actually lose money, who is doing what part of the transaction?"

Pillatos didn't have a formal legal agreement in place when she bought her first house, but she and her friends wrote down all possible scenarios before making any moves from how to split utility bills and mortgage payments to what happens if someone needs to move out of state for a new job or how the proceeds are divided when you eventually sell the home.

"Thinking about life changes and what you would do to navigate those situations from a financial standpoint, all of those are really good things to keep in mind," Pillatos says. "Then what do you want that living space to look like?"

Pillatos bought her first home in the Seattle suburbs with her husband at the time and another married couple.

Though the property had separate bedrooms and living areas for both couples, it only had one kitchen, so the agreement also included information on how to divide up cleaning and how to organize meals. Other things included in the agreement were quiet hours and what to do if there needed to be a group meeting.

Find the Right Place

When looking for the right home, there's no right answer. Are you looking for a vacation home that you can share on weekends and rent out? Or are you looking for a home where you and your friends can coexist happily?

Pillatos recommends searching for places with an accessory dwelling unit (basically a second home on the property), a home with two kitchens, a duplex, or any home that has separate living spaces for each friend so "you're not stepping on each other."

Her home had a living room, two bedroom, and a bathroom on the main level, and the same in the basement so each couple had plenty of private space.

Pillatos and her housemates did shared meals throughout their time living together, which didn't always appeal to everyone.

"They loved sloppy Joes," Pillatos says of her friend and her husband. "I think sloppy Joe's are the most disgusting thing on the planet, and I was just like, 'Don't make those on shared meal night.'"

But Pillatos says, there weren't really many issues during her time living with friends, as most possible problems were addressed ahead of time.

If you don't want to wait to own a home and have a friend you can really trust, Modares recommends taking the leap.

"If I would have waited to buy with a significant other I was serious about and felt comfortable with, I would have waited until I was in my late twenties to buy a house," Modares says, who bought her first home at 25 instead.