Three Friends, One Mortgage: Gen Z's Early Homeownership Journey

A Unique Approach to Real Estate Investment

Cole, Stefan, and Scott, who have known each other since high school, found themselves in a situation where they wanted to invest in real estate but lacked the necessary funds to do so individually. Their shared background in economics and finance gave them a solid foundation for understanding financial markets, but it was their friendship and trust that ultimately led them to take a bold step together.

They decided to co-purchase a home in Tampa, Florida, as a way to enter the real estate market. This decision allowed them to split the down payment evenly, making homeownership more accessible. The property is a three-bedroom, three-bathroom condominium located in a private gated community near the University of South Florida. Its location offers dual exposure, with proximity to both the city and a college campus, which could be beneficial if the local real estate market changes.

The Process of Co-Buying

The trio closed on the home in August 2023 for $357,500, with a mortgage rate of 7.625% and a monthly payment of $1,898. To facilitate the purchase, they formed an LLC, which made securing a traditional loan easier. They were advised to make a 25% down payment, which came out to about $30,000 per person.

At the time of the purchase, Cole was 24, while Stefan and Scott were 23. Although they had some money in the stock market and had lived at home after college, none of them had the full amount needed for the down payment. Splitting the cost made the investment feasible for all of them.

Navigating the Homebuying Process

Initially, the group was unfamiliar with the homebuying process. They didn’t know how to find a lender, form an LLC, or locate an agent in a distant area like Tampa. They partnered with Nestment, a company that helped them research up-and-coming real estate markets across the country. Once they identified Tampa, Nestment introduced them to an agent who showed them properties via FaceTime. The company also assisted with forming the LLC and connecting them with lenders.

Managing the Property and Financial Challenges

The home is currently rented out, with long-term tenants being the preferred choice over short-term rentals. Scott, one of the co-owners, is temporarily living in the house, while Stefan and Cole reside in an apartment in Long Island. After Scott and his wife move out, the property will continue to be rented to other tenants.

Despite some challenges, such as occasional rent shortfalls, the group has managed to stay optimistic. They’ve taken advantage of tax benefits from operating at a slight loss and expect the Tampa market to appreciate over time. Their plan includes refinancing once interest rates drop, which should improve their monthly cash flow.

Organizing Responsibilities and Expenses

To ensure smooth operations, the group has set up a separate bank account under the LLC. This helps keep their finances organized and allows them to monitor business activities as needed. They’ve divided responsibilities among themselves: Scott handles tenant relationships, Stefan manages mortgage payments, and Cole oversees maintenance.

All expenses related to the property are tracked in a spreadsheet, and payments are settled every few months. For example, if one person spends money on repairs or utilities, the others adjust accordingly. Their biggest expense so far has been replacing the air conditioning system, which cost around $7,000, and they split the cost evenly.

Looking Ahead

The group’s goal is to treat this investment as a side business that can supplement their income and build their net worth beyond their regular jobs. They understand that real estate is a long-term commitment and have maintained constant communication and trust throughout the process.

Co-buying with friends has proven to be a valuable experience, not only for entering the real estate market but also for strengthening their friendship. Even though they live in different parts of the country, they stay in touch by discussing the property and meeting up periodically.

They’re excited about the future of the property and plan to continue building equity. The ultimate goal is to roll over the equity into another investment property, possibly together. Their journey highlights the importance of teamwork, planning, and staying focused on long-term goals.