Would-be buyers team up to break into Toronto's red-hot real estate market
Interest in co-ownership is on the rise as real-estate prices in Toronto continue to climb
Siobhan McPherson calls the thought of buying a home on her own "overwhelming."
That's why the 31-year-old and her younger sister, Madeleine, decided to purchase their triplex on Hallam Avenue together.
"It was mostly for financial reasons," McPherson said. "It's really difficult to buy property in Toronto as a single earner."
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The sisters are part of a growing co-ownership trend, where prospective buyers are putting their heads and wallets together to break into Toronto's red-hot real estate market and buy homes they otherwise couldn't afford.
They each live in separate units of the home they purchased for $655,000 in 2012, and collect rent from a tenant in a basement apartment.
The sisters are tackling a laundry list of renovations and McPherson admits it's nice to have a familiar face around when things go awry.
"When your basement is leaking in the middle of the night and there's water pouring into your tenant's bedroom, having someone else there to be part of that is really important."
McPherson said the whole process has spawned inevitable sibling rivalries, but it is bringing them closer together.
"Because we've been through so much with this place and we've had to put so much trust in each other with the money aspect of it, our relationship is much stronger than it was four years ago."
Co-ownership runs in the family
McPherson got the idea from her mom and aunt, Virginia Heffernan. The sisters, along with their husbands, purchased a triplex in Chinatown together in the early 90s.
"In terms of financial pressure, we basically had none," Heffernan said. "There were five of us covering the mortgage, if you include the basement tenant, and we were also able to split the heating and electricity costs and the maintenance. We all contributed to that."
She said that arrangement helped her and her husband, both geologists, save up for their current home on Rusholme Road.
"We were able to take some equity out of that house and use it as a down payment for this house," she said. "That really helped us to buy a house on our own."
'I couldn't afford to buy a house alone'
Real estate agent Danyelle Boily became interested in co-ownership when looking for her own living arrangements after her divorce. "I wanted to buy in my neighbourhood and I thought, 'Holy smokes, I can't,'" she said.
"I couldn't afford to buy a house alone and I didn't want the responsibility."
She said people are becoming increasingly interested in learning about co-owning for a variety of reasons.
Some retirees want to downsize together, some parents purchase a home with their children so their children can get into the market, and some divorcees sell a portion of their home so they can remain living in it.
She explained places like New York, Vancouver and Montreal have a precedent for it because the buyers have been pushed into finding more creative solutions to find affordable living in a downtown area.
"Because there's no precedent in Toronto, people are afraid to talk about it and get into business with somebody on a large ticket item," she said. "It's very daunting to do that."
Get the 'what ifs' in writing
Toronto real estate lawyer Mark Weisleder says in a co-ownership situation there is only one mortgage and the co-owners have to agree on how it will be divvied up. Some opt for a 50/50 split, but others take on varying percentages.
If one owner loses his or her job or can't pay up, the liability falls on the other person.
He said the most important document is a joint venture agreement, which outlines what happens if things go bad.
"People start out as friends when they do this, but when problems start to happen it can be a different story."