Illustration: Emma Erickson

Welcome to “Apartment Department,” Curbed’s advice column by Clio Chang. Join us every other Wednesday for questions about making peace with noisy-sex neighbors, the nuances of roommate fridge etiquette, and whatever else you might need to know about renting, buying, or crying in the New York City housing market.

Got a problem? Email clio.chang@nymag.com.

Dear Apartment Department,

My best friend and I have been talking about buying a two-family house and living in it together. We’re both in our late 30s and have wanted to buy for a while, but everything is out of our range as solo buyers — so going for it together seems like the ideal (and only) way to get out of the rental market in New York City. We’d love to find a townhouse with two separate apartments, so we don’t actually have to be roommates. My friend would have to use her parents’ money to help her. Is this an inspired or terrible idea? Am I accidentally about to ruin my closest relationship? 

Yours,

A Friend in Deed

For something like this to work, you and your friend have to go in on the same page. Not impossible, but immeasurably harder than it sounds! A cautionary tale to start: Michael Kahler, a broker at Compass, told me about two couples he was helping in their search for a place. They found a townhouse in Cobble Hill that was in their price range and already split into an upper and lower duplex, which was partially basement-level. Both couples loved the property. But there was one problem: They both wanted the upper level. (Who wouldn’t?) “I was like, of course,” Kahler said. “They were best friends, but when the rubber met the road, they wanted the same thing. I don’t believe either one of them was willing to take the lesser unit.” The two couples, Kahler says, have since split up their search. So beware the garden-apartment wedge.

Which isn’t to say buying with a friend isn’t a good plan. In fact, as you mention, it might be the only plan, given the price of real estate in the city. But prepare yourself, because there’s a lot to get in order: What is your budget? How long are you willing to look? “I have three separate groups of clients, and all of them have yet to transact after a year and a half,” Kahler said. “I’m a borderline therapist in these meetings.”

But to help give you a sense of what’s involved, I asked Kahler to run the numbers on a hypothetical buy. I found this $1.85 million two-family in Prospect–Lefferts Gardens, and Kahler budgeted it out with his preferred lender. Generally, co-buyers would be on the same mortgage, though they will submit separate loan applications assessing their respective credit scores and financials. (An unmarried couple buying together would go through the same process, for example.) For the Prospect–Lefferts Garden house, that would mean coming up with $370,000 for the down payment between the two of you. From there, it would be $8,873 per month for the principal and interest. (You don’t have to contribute equally or own the same amount of equity in the place, but you will be equally obligated to make the payment.) Have you and your friend had granular conversations at this level? It might be time to start.

So let’s say you’re approved for the mortgage and close on the house. (Congrats, hypothetically.) Now let’s get into the work of being good co-owners. “It’s both a great idea and a terrible idea,” Adam Stone, a real-estate lawyer who has worked on a few dozen co-buying contracts over his career, said of buying with a friend. Stone and basically everyone else I talked to agreed you should hire an attorney to help draw up your terms to keep the peace in the long run. If everyone goes in with clear expectations, you can hopefully avoid surprises and nasty fights down the road. “Everything’s great when you begin, but you have to document it properly as if you were strangers,” Stone says. There are two options — you can enter into a tenancy-in-common agreement, which allows people to hold individual interests in a property and is the simplest method, or form a business corporation like an LLC, which is more complicated but comes with built-in legal guardrails, like shareholder rights. Either way, Stone recommends you lay out every scenario you can think of, no matter how small they may seem to you now. If there is a backyard that’s only accessible through one apartment, how does that get split up? Is there a fund for repairs? Who’s responsible for maintaining the stairs in between the two units?

A person who co-bought a two-family house in South Brooklyn with her husband and another couple told me that the one thing she wished they had done differently was write out a formal agreement. (Stone, the lawyer I talked to, would agree.) “It’s nice to not have to discuss things again,” she says. They had to take an ad hoc vote, for example, on the color for their new siding. But overall, they’ve had few issues. And the upsides, she says, are worth it — together, they were able to afford a place with shared office space, a soundproofed music room, and a backyard. She pointed out that if you want to buy in the city, you inevitably have to make sacrifices somewhere, whether it’s losing the extra space or the autonomy. “If you buy into a co-op, you have to make a decision with a bunch of strangers,” she said. “At least we’re making decisions with people we trust.”

As for the rest? The most important thing to think about, oddly enough, might be your exit strategy, Stone added. “It doesn’t last forever,” he said. “Sometimes it doesn’t last nearly as long as you think it’s going to.” One of you might lose your job and be no longer able to make the mortgage payments. New relationships or other life changes might take one of the co-buyers out of state. Should one person want out, usually their co-owner has a right of first refusal to make an offer on the other share of the house. But if that person can’t afford to buy their friend’s share, you might be forced to sell the entire property. Outlining all these scenarios beforehand makes it easier in the eventuality that your lives diverge someday.

Finally, I talked to Toby Werdyger, a therapist who specializes in mediating family-business relationships, about what makes for strong co-buyers. She suggests a sort of a stress test: When you bring up the worst-case scenarios, how does your friend respond? “If the person you’re trying to buy an apartment with says, ‘We’ll figure it out,’ that’s not an option,” Werdyger says. “But if you ask each other the hard questions and they’re willing to engage, then this is someone who maybe it’s worth doing it with.” She also advises setting aside a regular time to talk through business concerns so there’s a natural rhythm to these conversations rather than, say, having to hash out the broken toilet at your mutual friend Charlotte’s birthday drinks.

If this all sounds like a lot of work, it is! You’re kind of marrying the person, in that you’re blending your financial and personal lives in a way that requires real trust. (And they are both contracts.) But there’s real upside. Like so much in life, it’s often better to not go it alone, right? And if you go in with clear expectations and strong communication, it can be a lasting commitment. Maybe you’ll even live there together until you die, peacefully, in your separate bedrooms.

Have a question for the Apartment Department? You can send it to clio.chang@nymag.com.

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