Buying a holiday house with the family - bad idea?

[ElectricG]

My sister and I have been obsessed with the idea for a couple years. I’ve known others who have a holiday house “in the family” and they all seem love going there at any given opportunity. On the other hand there are risks: financial commitment, making sure the maintenance is equitable, lending it out to friends, etc.

Also, by “holiday house” I mean a house in a rural/country area that is of modest value.

Thoughts?

 

[Taylor]

You need to be sure that your funding arrangement allows for each party to cover the obligations of the other parties - or you will eventually find yourself in a position where other people's financial needs call for the sale of the holiday home and the rest will be stuck having to follow through with that request.

You need two agreements on how the costs of maintenance and utilities will be split, one for ongoing structural upkeep and one for the service costs of using the home - really one should be split equally and the other split based on the usage percentage.

If you have agreements in place then there is less chance of an issue later if one party spends most of the year there and everyone else feels like they are just subsidising that party's lifestyle.

If you buy the property via a family trust you might be able to make it tax effective for all parties.

 

[Hamingja]

If you require any lending to buy it, definitely don't do it. Joint and several liability so banks would consider 100% of the loan as your liability regardless of your ownership percentage. That is likely going to cause issues for at least one party when they want their own home loan in the future.

 

[Kwality]

My sister and I have been obsessed with the idea for a couple years. I’ve known others who have a holiday house “in the family” and they all seem love going there at any given opportunity. On the other hand there are risks: financial commitment, making sure the maintenance is equitable, lending it out to friends, etc.

Also, by “holiday house” I mean a house in a rural/country area that is of modest value.

Thoughts?

Are either of you selfish ? Go missing when the work is to be done with 'a fair excuse'. One handy, the other 'not so'.

 

[Evolved1]

Never ever get involved in a financial/business/investment arrangement with family members or friends. Slap yourself for even considering it.

 

[ElectricG]

Yeah.. reality check delivered.

 

[HirdsTheWord]

sounds like you got the message.

do not go into business with family. And most certainly do not go into debt with them either.

 

[sammm]

yeah, don't do it with family. but if you have to, have a full legal contract drawn up

 

[Todman]

I don't have a holiday home. Here are some reasons why.

How many nights a year will you sleep there?
If you want to sell, how fast will you find a buyer?
An older house means lots of maintenance costs.
You are obligated to holiday in the same spot every year.
Every month you need to spend a day doing gardening and lawn mowing.
How far is it from your main home? Is it cheaper to drive home every day.
Is it crowded during school holidays?
Is it like a ghost town during off-peak?
Are you liable for council rates and state government land tax?

 

[Kwality]

I don't have a holiday home. Here are some reasons why.

How many nights a year will you sleep there?
If you want to sell, how fast will you find a buyer?
An older house means lots of maintenance costs.
You are obligated to holiday in the same spot every year.
Every month you need to spend a day doing gardening and lawn mowing.
How far is it from your main home? Is it cheaper to drive home every day.
Is it crowded during school holidays?
Is it like a ghost town during off-peak?
Are you liable for council rates and state government land tax?

Yep its a luxury & a functional family helps.

 

[_Mike_]

Any time you’re going into a property project with family ensure you register the title as joint tenants and have a solicitor draw up a formal agreement