What to Consider When Buying Land With Family Members

Co-owning land for sale with family can be a smart investment, especially if it’s a second home. You split the costs with people you know well as well as the responsibilities of owning a property – in theory, it’s a perfect plan. In practice, it doesn’t always work out as planned, and in the worst-case scenario, it could be an exhausting fiasco.

There are a lot of contingencies to account for to ensure this is the right plan for you and your family. It’s important to discuss the relevant financial factors and clearly establish rights and responsibilities prior to moving forward.

Questions You Should Ask While Evaluating a Property for a Joint Family Investment

How Is Ownership Divided?

The co-ownership agreement should include a detailed breakdown of the percentage of the property each family member will own and whether the property title will be held in a joint tenancy, tenants in common or in another form. You should also form contingency plans in the event of death, divorce or another life event that could drastically alter your agreement.

What Is Everyone’s Long-Term Goals?

You and your family members should clearly understand each other’s ideas on how to use the property beforehand. If one wants to use it as a primary residence, but another wants to use it as a rental property, that could breed some heated arguments in the future. Even if everyone plans to use the property as a vacation home, you should discuss how long each member intends to be there, during what seasons and a method of resolving disputes if preferred times overlap and there isn’t adequate space for your family and guests.

How Will Costs Be Shared?

From upfront purchase costs, like the down payment and closing costs, to ongoing expenses like utilities and taxes, all the little things can quickly escalate into a larger issue if not calculated and distributed upfront. Divide the costs equitably and devise a plan to account for unexpected costs that may arise in the future, such as major repairs and emergencies.

Is There Enough Space for Everyone?

Putting the financial concerns aside, there are also the practical, day-to-day matters that can impact joint ownership. Consider if the property has enough bedrooms and bathrooms to give every family member privacy, if the common areas are large enough to fit everyone and if the space will be able to accommodate future additions to the family.

Is There an Exit Strategy?

Hopefully, everything works out, but you should still have contingency plans in the event it doesn’t. In your co-ownership agreement, you should include details of how disputes will be handled, how to manage buyouts if one family member wants to sell their share and any conditions or situations where the property may be sold.

Is It Worth It to Buy Land With Family?

There are notable benefits to buying land with family. Co-owning can help reduce the individual financial burden, allowing you to afford a better, higher-value property than you would have been able to alone. It can also work to reduce the stress of land ownership, as you’ll be able to spread the responsibilities among multiple parties.

That said, a joint venture between family can be a risky endeavor. There’s a higher risk of disagreements and discord compared to a personal investment, as your financial stability could be endangered if another family member is irresponsible or runs into financial problems.

Moreover, life is messy, and any transaction will often become messier the more people are involved. A family member may divorce or pass, leading to extensive property ownership negotiations and new drawn-up contracts that make what was once seen as a simple investment into a point of contention in your family.

Ultimately, the decision will depend on the family and the property itself. If there’s clarity and understanding at the foundation of the joint venture, then chances are buying land with family could pay dividends. Whether the property is a good purchase for a family will also depend on its attributes. If it’s not big enough to accommodate your group or has limited amenities, it could increase your risk of arguments in the future.

While we can’t promise everything in your co-ownership agreement will go according to plan, Ranger Ridge can at least assure you that your second home will be big enough. We offer five to eight-acre parcels of luxury land and the services of some of the most renowned custom homebuilders in Texas who will help you build you and your family’s dream home. We also boast a wide assortment of outdoorsman activities – from hiking, fishing and hunting to horseback riding – and amenities for relaxation that will keep everyone in your family entertained.

Families in Fort Worth and Those Nationwide Looking for the Perfect Custom Vacation Homes Owe It to Themselves to Learn About Our Extraordinary Sportsman’s Refuge

Buy development-ready parcels of luxury property now before it’s too late. Call Ranger Ridge today at (817) 618-6773 or fill out our request form to learn more or book a tour.