Buying a Home With Friends: Red Flags to Watch For & How to Create a Solid Operating Agreement
Hey everyone, Kristina here!
Today, I want to talk about the biggest potential pitfalls of co-buying or buying with friends and how to protect your partnership with an operating agreement.
Spotting Problems & Facing Challenges Together 🤝
In any big financial venture, challenges are inevitable—whether it’s unexpected expenses, clashing priorities, or shifting goals.
The key? Spot red flags early, before they turn into full-blown problems.
Choosing the right real estate partner is a lot like dating—if they’re unreliable, vague about their commitments, or constantly changing plans, that’s a sign to reconsider.
🔹 You want a partner who is:
✔️ Trustworthy
✔️ A clear communicator
✔️ Aligned with your values & long-term goals
My Own Experience: When a Partnership Doesn’t Work Out
A while back, My Former Business Partner and I teamed up with a friend to buy a home. We thought it was a perfect match—until we started house hunting.
Our friend’s vision kept changing. One day it was a fixer-upper, the next day a luxury rental. Nothing felt aligned.
Eventually, we did buy a place, but none of us loved it. We ended up selling pretty quickly.
💡 The silver lining? We had an operating agreement in place. Even though the partnership wasn’t ideal, the agreement ensured we handled the exit fairly and without financial disaster.
What’s an Operating Agreement?
An operating agreement is your partnership’s game plan—a legal document that clearly defines roles, responsibilities, and what happens if things don’t go as planned.
This isn’t just for protection—it also helps set clear expectations upfront so that everyone is on the same page.
💡 Pro Tip: Work with a lawyer to create your agreement. They’ll help ensure all bases are covered so you can move forward with confidence.
Essential Info to Include in an Operating Agreement
Here’s what I highly recommend including:
1. Ownership Percentage
📌 Who owns what? It doesn’t have to be 50/50—ownership can be divided based on financial contributions, effort, or responsibilities.
2. Initial Cash Contributions
📌 How much money is each partner contributing to the purchase?
3. Exit Strategies
📌 What happens if someone wants out? This should cover situations like:
✔️ Selling their share
✔️ A buyout process
✔️ What happens in the case of death or disability
4. Owner’s Draws & Profits
📌 Can partners take money out of the rental income? Or does everything go back into the property?
5. Reserve Funds
📌 How much money needs to be set aside for repairs, emergencies, or vacancies?
6. When to Sell & Exit Conditions
📌 Under what conditions will the group agree to sell the property?
7. Property Management Responsibilities
📌 Who is handling:
✔️ Rent collection
✔️ Maintenance
✔️ Taxes & paperwork
8. Financial Contributions for Repairs & Updates
📌 If the home needs a $10,000 roof repair, how will you split that cost?
9. Decision-Making Process
📌 Will decisions be made unanimously, or does someone have final say?
Think of This as a “Prenup” for Your Investment
A real estate partnership is a financial relationship. And just like marriages have prenups, partnerships need operating agreements.
It’s not about assuming the worst—it’s about protecting the friendship and the investment.
If everything goes great, you may never need to reference the agreement. But if things get messy, you’ll be grateful you have a clear, legally binding plan in place.
Make This Actionable: What Do You Bring to the Table?
In my last post, I asked you to answer:
💡 “What do I bring to the table in a real estate partnership?”
Now, take that answer and refine it into a pitch.
If you’re serious about buying with friends or family, you need to be able to clearly communicate your value.
🔹 Do you bring financial stability?
🔹 Are you a great property manager?
🔹 Can you handle the numbers and research?
Use this to confidently pitch your vision to potential partners.
What’s Next?
Ready to meet women who get this?
If you’re exploring co-buying or creative real estate strategies, you shouldn’t have to figure it all out alone.
That’s exactly why I created the Open House Community—a nationwide space where women connect, collaborate, and build wealth together through real estate.
Inside the community, you’ll find:
💬 A private forum to ask questions and get honest advice
📚 Workshops and events on co-buying, legal tips, financing strategies & more
👯♀️ Real partnership stories from women who are doing it—messy moments and all
🤝 Opportunities to meet aligned, proactive women who could be your future co-buyers
If this post resonated with you, I know you’ll love it in there.
We’re making co-ownership less overwhelming—and a whole lot more doable (and fun).
Final Thoughts
Buying a home with friends isn’t just about finances—it’s about relationships.
The right partner can help you achieve homeownership faster, build wealth, and create an incredible investment.
The wrong partner can turn the process into a headache.
So choose wisely, set clear expectations, and protect yourself with a solid agreement.