You’ve heard it thousands of times on TV, the radio, and in junk mail—spurious ads delivered with forehead-vein-popping enthusiasm by robot-faced dudes in shoddy suits. Bad credit? Expensive city? First-time buyer? No problem! You—yes YOU!—can own your very own home.
It’s easy. We’ll show you how. If these cringe-inducing pitches aren’t enough to turn you off, the ever-escalating real estate prices are. Is there any hope?
Kind of. The first thing any prospective buyer needs to know is that unlike what Tom Vu or Donald Trump say, buying a house is not quick and easy. But consider the alternatives of not buying, such as moving to Barstow, working until you’re 95, or spending the equivalent of three houses’ mortgages by paying rent your whole life.
So whether or not you want to believe it, the time to make the leap is now. Prices may dip, and markets may recess, but in ten years, real estate prices in most major cities could—some think will—double. And most of you complaining that you can’t afford to buy in the city right now actually can. You—yes YOU!—can own your very own home. We’ll show you how.
A tenancy-in-common (TIC) is when two or more people join together to own a percentage of the same property. “In San Francisco, this is becoming a very common option for first-time buyers,” explains John Barnette, a partner in the real estate team The Johns.
Though common for commercial properties, TICs have expanded rapidly in the private home market. This trend so far remains relegated to San Francisco, but is likely to expand to other cities as these partnerships gain further acceptance.
To purchase apartments through TIC, partners all sign on the same mortgage. The terms of ownership—who lives where and for how much—are all documented in a TIC agreement drawn up by a lawyer.
The risk of a TIC is that each partner can be held culpable for the other partners’ percentage of the mortgage. That means if one person defaults on the mortgage, the other TIC partners have to make up the difference. In the past two years, this risk has significantly lessened with the introduction of new TIC-specific financing options such as “fractional” loans that protect TIC partners if another defaults on the mortgage.
What attracts most people to TICs is their cost—up to 20 percent less than a condo- minium. “After eight months of looking at houses and condos, we realized a TIC was the only thing we could afford,” explains Matt Deems, who purchased a two-bedroom TIC in San Francisco’s Noe Valley.
Deems and his wife joined a TIC with two total strangers they met via Barnette. The group first met casually “just to see if they liked each other,” explains Barnette and eventually exchanged financial statements for each other to scrutinize. Deems adds: “It was a little weird to rely on people we didn’t know, but we were willing to take that risk.”