It is not common for a first home buyer to pick up a three-bedroom house in a central Auckland suburb these days but, by joining forces with a friend, Stephanie Walker managed it.
The arts and events creative producer had a $100,000 deposit for a house, but after seeing a mortgage broker she was left discouraged, especially as she wanted to continue living in central Auckland.
Her options as a single income earner seemed limited to a shoebox apartment, or a move to the outskirts of the region.
But she discovered an old friend of hers was in a similar situation, so they decided to join forces and buy a house together.
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They spent nine months house-hunting and attended many auctions, some for properties they wanted but which sold for more than they could afford. But two months ago they found a house that appealed.
While the converted warehouse off Karangahape Rd in Auckland Central is different to what they had wanted, they liked the property and its location. They were the only bidder at the auction and got it right on the limit of what they could pay.
Walker says it cost $1 million which means they have a mortgage of $800,000 between them, so they each owed $400,000.
Thats much more manageable and reasonable than if we had to shoulder it all by ourselves, and the repayments are comparable to what we were paying for rent, so it works out well.
They have a property agreement covering the purchase of the house and have talked through issues such as maintenance, decor and what happens if a partner arrives on the scene.
Rising house prices are making it harder to save a deposit and that is prompting first home buyers to join forces.
It is a great way to get into the market if you have a bit saved but can not stretch the whole way by yourself, or do not want to make big compromises on the type or location of the property you buy, Walker says.
But you do need to have the same goals with the purchase. It wasnt about getting on the property ladder for either of us.
The key thing was that we didnt want to keep paying money to a landlord. We wanted a place to live in of our own. And that couldnt have happened for either of us if we hadnt bought with a friend.
These days making a joint purchase is not unusual for first-time buyers, she says. In fact, the lawyer who did our property agreement recently bought her first home with her sister as that was the only way they could do it.
Anecdotally, growing numbers of people are buying with family or friends as house prices rise and saving for a deposit gets harder. Real estate agents confirm that is what they are observing too.
Trade Me Property sales director Gavin Lloyd says getting into the property market and sharing costs with a mate has its advantages.
Real Estate Institute chief executive Jen Baird says first home buyers are getting more creative with how they are getting onto the property ladder.
While purchasing a property with friends or family is not a new concept, it is definitely one they are seeing become more prevalent, she says.
Its not uncommon for parents to invest in a property with their child to help them secure their space in the market, but weve also seen a recent increase in the number of siblings pairing or grouping up to secure a property.
They combine their KiwiSaver and First Home Grants to make up the deposit amount, and then they either cohabitate long-term, or one works towards buying the other out once they have built up enough equity.
Some groups of friends are also banding together to buy a property, but it is not as common, she says.
Either way, it is great to see first home buyers looking at their options and finding their way onto the property ladder.
EnableMe director Hannah McQueen says buying with someone else is better than not buying, but if someone has other options they should explore them first.
Trade Me Property sales director Gavin Lloyd agrees the practice is becoming more common for those looking to enter the market for the first time and get their foot on the ladder.
A problem shared is a problem halved. Going into the property market with a mate and sharing the costs and decisions definitely has its advantages.
But its important to do your due diligence first and have tough conversations early on to benefit everyone in the long run.
That means making sure all involved are clear on their expectations, around such issues as costs, insurance and decorating, going into purchase and also ensuring everyone is aware of the risks, he says.
Even when you only own a share of a property, youre liable for the entire mortgage. If for whatever reason the other party cant keep up with the payments, they will fall on the other owners.
In the same vein, keep in mind your credit record will be tied to your co-owners and could take a hit as a result of their finances.
It is due to these financial risks that EnableMe director Hannah McQueen recommends pursuing co-ownership only when there is no viable alternative.
She too says the current hot market means there has been an upswing in the number of people who have either joined up with family or friends to buy a property, or who are intending to do so.
Its usually because their options are limited if they dont. Buying with someone else is better than not buying, but if someone has options which would allow them to buy alone they should explore them first.
One reason is co-ownership means taking on 100 per cent of the commitment and liability, not a share of it, and while it can lower the burden, it also means the profits are halved, she says.
Gilligan Rowe Associates head property coach Than Sundaralingam says joint ventures open up opportunities that might not be there otherwise.
There are often romantic views about buying with someone else, but assume there will be tears and build detailed agreements addressing that. And make sure that your personal situation can withstand problems.
McQueen says the best way to go into co-owning a property is to treat it as a medium to long-term goal and as a stepping stone to an individually owned property.
It is not just first home buyers who are banding together more to buy property, investors are too.
Joint ventures have long been a strategy embraced by property investors, but Gilligan Rowe Associates head property coach, Than Sundaralingam, says it has experienced an increase in people opting to do them.
If people are in a situation where they can only do so much on their own, a joint venture makes it possible to utilise the partnership to build equity or make money which enables them to move forward, he says.
A joint venture can also enable you to buy something better than you would otherwise have been unable to. Its also about sharing risk for people who are not confident.
It was buying his first family home with his sister that provided him with his start in property, Sundaralingam says.
Buying together helped both of us along. Joint ventures do open up opportunities that might not be there otherwise.
But understand what you are getting into, know your co-owner and what their goals are, and protect yourself legally. Because when these arrangements go well, they are great. But when they go bad, they can be terrible.
