This transcript was generated from the episode audio and may contain minor errors.
If you want to get into rental properties, if you have heard about that or have got friends that are doing rental properties, does it ever make sense to do it with a group of friends? If you want to get your first rental property and you don't have a lot of capital, can't make that down payment, or you just like the idea of sharing the risk or doing some kind of fun project with people who are also interested in investing, should you even consider this? Is this something that should be totally off the table or is there a way to do it and make it work? If you wanted to try it, what potential pitfalls would you hope to avoid? That's what our caller wants to know.
We've got a listener out there who is getting ready to buy their first rental property. I don't talk about rental properties a ton. I tend to look at more digital ideas, virtual ideas, things you can do without spending a lot of capital, let's say, but this is an interesting twist. If you want to do it with rental properties, does it ever make sense to do it with a group of friends? I actually know a couple of people who have done this, so I'll try to address that in my answer.
Let's see if we can come up with something helpful for our listener, Calvin. His question and my answer coming up in just 30 seconds. Hello, Chris. This is Calvin, and I've been listening for a couple of years. I'd like to buy my first rental property, but with a twist.
I want to invest with several friends so that we all own shares. We think this will decrease our individual exposure while also allowing us to buy a bigger property, or maybe even a multi-unit property. What could go wrong? Just plain. I know a lot of things could go wrong, so that's why I'm asking.
If we make sure we're in agreement on the important parts of the partnership, especially how we make decisions regarding renters and maintenance, and we get this all spelled out properly in a contract, do you think that mitigates the potential problems? And do you know of anyone who's done this successfully without it turning into something that ends up being featured on Failure Friday? Thanks. Hey, Calvin. What's up, man?
Well, I don't think it's a totally crazy idea. Some of our listeners might disagree, but I actually don't think it is completely crazy. Hopefully, it doesn't end up on Failure Friday. At least I don't think it is destined to, and perhaps I feel that way because I actually have some friends, multiple friends, who have done this. In one of the cases, it's more of a shared home.
They actually own multiple homes around the world, which sounds very elite and ultra-rich, except it's a group of people. They have found a way to essentially divide the responsibilities, divide the initial purchase, to do so in a way that's affordable and allows them to have these different experiences in different parts of the world, which is really cool. So it's a little bit different than rental properties, but they face similar shared decisions, such as how to handle maintenance, how to divide those expenses, what to do if one partner wants to exit, and so on. So in fact, I think that's really the key to success. Calvin, what you have identified, to make sure that this is really something that everyone involved wants to do, like nobody should be talked into it, and that they're committed to spelling it all out in a lot of detail at the outset.
Who exactly is going to do what are our commitments, our liabilities? How will we handle different situations? This is especially important with multi-party contracts, where it's not just two parties, but it's three or four or more parties. And this is a thing that's been done, as I said. One other resource, check out BudgetsAreSexy.com.
This is actually run by a friend of mine named Joel. It was started by another friend named Jay Money, now run by a guy named Joel. BudgetsAreSexy.com. He's got a lot of great personal finance info, including some firsthand reports on how people have done this, managed rental properties through shared ownership, and made it work well. Like how they have avoided disasters and failures, but they've actually made it into something that is both profitable and enjoyable.
So is it for everyone? Absolutely not. I think most people don't want to go that route, but is it totally crazy? I don't think so. I think there is a proven path for it.
So let us know what happens, and listeners, if you have a question or some experience with rental properties or whatever else it is, sidehustleschool.com/questions. Love to know what you're working on, what you're up to. We are almost at episode 1900, which is crazy. Buying a rental home with multiple parties is a little bit different, but not crazy. Almost at 1900 episodes in a row, that is crazy.
But it's all thanks to you, so I'm grateful you can subscribe or follow wherever you get your podcasts. New episode every day. My name is Chris Guillebeau. This is Side Hustle School. From the Onward Project.
