George Kamel - This Housing Trend Totally Sucks (Don't Do It)

Episode Date: January 6, 2025

💵 Start your free budget today. Download the EveryDollar app!    If you’re thinking about buying a house with your BFFs, hold it right there. In this episode, find out the pros and cons of buying a home with friends, plus five things to know before becoming a homeowner.   Next Steps:  🎥 Watch my video Don’t Buy a Home Until You Watch This.  🏠 Keep up with the latest U.S. housing market trends with RamseyTrusted.   Connect With Our Sponsors:   🔒 Get 20% off when you join DeleteMe.    💸 Learn more about opening a high-yield savings account with Laurel Road.    📱 Get $5 off Tello's Unlimited Plan and enjoy great nationwide coverage for only $20 at Tello.      Explore More From Ramsey Network:   🎙️ The Ramsey Show  🍸 Smart Money Happy Hour   💸 The Ramsey Show Highlights   🧠 The Dr. John Delony Show   💡 The Rachel Cruze Show   💼 The Ken Coleman Show   📈 EntreLeadership      Ramsey Solutions Privacy Policy   Learn more about your ad choices. Visit megaphone.fm/adchoices

When you think of things to do with friends that involve money, you might think of a boy's trip to Bartholona, or throwing a silent disco featuring only songs from the Space Jam soundtrack. And even though buying a house isn't usually what comes to mind, that's just what some besties are doing to get around crazy home prices these days. But before you drive off with your BFF, Thelma and Louise style to buy your dream condo in the city, let's look at the pros and cons so you can figure out whether this is a good idea. And if you don't know, just ask a boomer what happens to Thelma and Luis in the end. Here's a hint.

I guess they drove away safely. Excuse me! Spoiler alert! If you're watching this, it's time to DTR. And frankly, I think of us as friends. And if you think so too, like and subscribe and share this video. And maybe send me a friendship bracelet. Actually, don't. I'm kidding. Don't do it. I'm a well-adjusted healthy adult. Sorry, Swifties, no shade.

But judgment. Very much judgment. So what could be more stressful than picking out financing, purchasing, and maintaining your biggest investment? Doing it with friends! That sounds insanely relaxing. But a solid chunk of millennials and Gen Ziers are embracing the chaos and buying homes with non-romantic partners anyway. Just how many? Almost 15% of Americans. And an additional 48% of

of those surveyed said it's something they would consider. And I get how this might sound like a good idea. You don't have enough money to buy a house. Uncle Randy keeps telling you renting is like letting money on fire, and you feel like if you wait to buy, you'll be priced out of the market permanently. Plus, you have these great friends who feel the exact same way and have the same mid-century aesthetic. So you could go on a house together and be one big happy family, like a 90s sitcom. Except here's the problem. Right where your BFF bracelet implies, friendships are not in fact forever. Real life isn't like stepbrothers.

So let's make a pros and cons list starting with the pros. Pro number one, you get to own a home. No more rent, no more wondering if your lease will be renewed, no more hoping the landlord doesn't notice you started renting out the attic to the guy who sells a lot of brown paper bags on the corner, and you get to start building equity. Owning a home is a pretty solid pro if you're financially ready. Next, on the pros list, well, that's... We're out of pros.

We have to move on to the cons now. Con number one, shared financial responsibility is a nightmare. You're not just signing on for the mortgage, you're signing up for every single financial problem your friend brings along. If they have 80,000 in student loans from their basket weaving degree, that comes with them. If they lose their job, if they have one, and then fall short on house payments, guess who's left to pick up the slack? Legally, you. Con number two. Friendship plus business equals drama. Mixing friendships with big financial decisions is like pouring ammonia and bleach into a shaker and expecting everything to be fine.

I've watched enough Bill and I to know that's a recipe for disaster. Literally a blast. Life changes, home repairs, unexpected expenses. All of these can turn into huge arguments, and sometimes friendships don't survive them. So just stop and think about how you would share maintenance costs and time. I'm not a particularly handy guy. I don't know if you can tell. So if the bathroom sink fell out of the vanity, I would call a repair man.

Or a repair woman. It's 2025. That was a close one. But maybe you're a hardcore YouTube DIYer and you want to fix it yourself. Yay, we save some money. but then a tile breaks, a leak springs up, and the HOA complains about your natural landscaping style, and you keep doing the work. Well, you're not going to be too happy with all the time you're putting in, with half the benefit going to me, who meanwhile is washing the Great British Bake Off and eating chocolate chips.

And the same goes for improvements in remodeling, because all your finances are not combined, so who puts in what, where, and how much can quickly lead to some big disagreements. Con number three, it's hard to escape. It's incredibly tricky to split up the house later if one of you decides to move on. And by the way, one of you will eventually decide to move on. And this can lead to all sorts of legal drama and financial loss because selling or buying out a friend's share is not as simple as it sounds. And remember, you went in with them in the first place

because you couldn't afford the house on your own. And this is real life. A group of friends told the Wall Street Journal about their experience buying a fixer-upper together. After two years of time-consuming renovations, one friend wanted out. But her friends couldn't afford to buy her out, so they ended up agreeing to monthly payments for several years

until her portion was paid out. And the one who got out also lost her share of the 50% appreciation and home value. Yikes. Con number four. Market risks mean friendship risks. We all know the real estate market fluctuates. If the market goes down, you might end up losing money.

And this is tough on your own or married, but you won't lose your spouse over it. It's a different story with friends. Reddit user Dare Barron said he lost two close friends by going in on a home with them, and they never even argued. It was the complication and stress of the whole deal that took its toll.

Con number five, lifestyle clashes. What if one of you likes to host your family a lot? Or if the house is a vacation home, who gets to use it for the 4th of July? And worst of all, and most likely, what if their significant others stays over enough to legally become a third roommate, but they ain't paying the bills? Why don't you go back to your own house and stop bothering us? And beyond the relational aspect, no two roommates have the same definition of what clean is. I don't care who's living with you. I don't buy the idea that you have to let the dishes soak.

Clean them up, Brandon. I'm just letting it soak. Gross. Con number six is lifestyle changes. Friends are not committed to each other. You're not working together to build lives, which means you or Phoebe or Ross or whoever can just decide to take that job in Paris

and suddenly you need to buy them out. Or let's say they get married. Well, hope you like their spouse, and then they have a baby, hope you like kids and screaming, and then they get a cat who pees in the closets. And whose closet only yours for some reason? Rude and very specific and personal.

Look, I'm not saying we're going to I'm just saying we have a case. You're better off having full control of your decisions, not shared with someone whose life might take a different path than yours. Like deciding Amway is the way for them to make six figures and have work flexibility. And suddenly the guest room that was supposed to be for, you know, guess, is now ceiling high with cardboard boxes full of supplements that definitely work and are not FDA approved.

So if buying a house with friends is a terrible idea, then how are you supposed to afford a house? On your own. Well, before I get to that, and since we're talking about friends, I want to introduce you to my friends, want to introduce you to my friends at Delete Me. Just like the friends on friends, Delete Me is there for you. And sure, no one told you life was going to be this way with your personal data sitting in every nook and cranny of the internet, but your security doesn't have to be stuck in second gear. Delete Me will remove your personal data from hundreds of these data

broker sites. And they'll save you tons of tedious work trying to find and remove that data on your own. Plus, they'll send you an easy-to-read report so you know exactly what they did and how much time they saved you. And right now, you can protect your data and get 20% off by going to join DeleteMe. or click the link in the description below. And if you want to afford a house, you probably need to cut your spending in some places to save up that hefty down payment. And a simple way to start is by switching phone plans. Too many of you are overpaying for your phone plans.

Meanwhile, my friends at Tello are committed to helping people save money on their phone bill. They've got plans as low as five bucks all the way up to $25 for their unlimited everything plan. And they've got super affordable international roaming for when you travel. And they don't do contracts or fees, so you're not stuck or dinged with extra costs. You can upgrade, downgrade, change your plan whenever you want with no fees. So go to tello.com slash George to get five bucks off the unlimited data plan during your first month of service. Or you can always click the link in the description below. Okay, so how can you afford a house without getting a mortgage with friends?

Here's a hack. You could wait until you get married and potentially have dual income. That'll help. You make it sound so easy. And let me be clear. The only person you should ever buy a house with is your spouse. Not a boyfriend or girlfriend or brother or mom. there should be a ring on that finger for all the reasons I just mentioned.

But regardless of your relationship status, there are five big things you need to know before you jump into home ownership, whether it's by yourself or with your spouse. Number one, you should be out of debt and have a three to six month emergency fund saved up to pay for all of the unexpected expenses that come with owning a house. Remember that sink that fell out of the vanity? Stuff like that. Number two, figure out how much house you can actually afford. Not how much the bank told you they'll give you, but how much you can really afford with your monthly budget.

Your house payment should be no more than 25% of your after-tax monthly income. You don't want a house payment so high that you can't afford groceries or a car repair. That's what we call house poor. You need margin to accomplish other life goals, like vacations, investing, and renovating the garage into a man cave. Right, Andrew? Where else are you going to pop us in and crack open a Krispy Boy and watch the big game with the guys? I assume that's what guys do. I have no clue.

No one's ever invited me to their man cave. You are a sad, strange little man. and you have my pity. Moving on. Number three, you should go with a 15-year fixed-rate conventional loan. The smaller payment on the 30-year might sound attractive, but you're going to end up paying way more in interest. We're talking six figures of wasted money that made your lender even richer.

Step four, you've got to have a solid down payment. If you're a first-time home buyer, 5% to 10% down is okay. But ideally, you want to save up at least 20% down to avoid PMI. That's private mortgage insurance, and that's an insurance premium that you pay the bank in case you default on your loan. It protects the lender, not you. And listen, there's a lot to learn when it comes to being a homeowner. And lucky for you, our team created an entire hub of resources

just for people who are looking to buy a home, sell a home, or invest in real estate. So go check it out at ramsysolutions.com slash real estate or click the link in the description below. We've got tools, calculators, articles, blogs, videos, you name it all to help you do this the right way. Oh, and number five, you need to be prepared for the sneaky expenses that come with home ownership. So keep watching this next video to find out all the hits. hidden costs that come with owning a home, or click the link in the description below to check it out. Thanks for watching.

We'll see you next time.