Many people in Texas Hill Country are looking to get into real estate ownership with a business partner, or perhaps they share an inherited piece of property they share with a relative. If so, they may co-own their property as tenants in common, meaning they each have an undivided ownership interest in the property, although they may have different ownership percentages in the property. There are benefits and drawbacks to owning property as tenants in common.
Benefits of holding property as tenants in common
Tenancy in common ownership of real estate has some benefits. First, when co-tenants in common combine financial resources, they can purchase multiple properties or higher-value property than what they could purchase as individuals. If these are income-generating properties, this means they will see greater returns on their investment.
In addition, owning property, whether it is residential or commercial, comes with costs. There are purchasing costs, maintenance costs, property taxes and insurance to pay. When there are multiple owners of a piece of property, they can spread these costs among themselves, meaning they will ultimately pay less than if they had to incur the entire costs on their own.
Drawbacks of holding property as tenants in common
There are some drawbacks to owning real estate as tenants in common. First, tenants in common cannot generally make the decision to sell the property alone. All co-owners must consent to the sale. This can mean less mobility with one’s real estate investments.
In addition, if you are interested in obtaining a mortgage with a co-owner as tenants in common, there may be additional hoops to jump through to obtain financing. Lenders may have certain requirements that must be met to obtain a mortgage as tenants in common. If they do offer such financing, it may come with restrictions.
Texas Hill Country is beautiful, and there are many real estate opportunities here. If you wish to own property as a tenant in common, you will want to carefully research whether this option is right for you.