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A real estate investment opportunity has presented itself to me in the way of a short sale in a condo/Co-op in which I live.  I'm thinking about buying the unit for cash with a friend (splitting 50/50) to use as a rental.  I've never purchased a rental property and am curious to know what kinds of additional considerations should be given because of the CoOp and short sale aspect?  

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rated:
Make sure they will allow you to rent it out. Some have a limit to how many units in the complex can be rentals.

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Honestly, money and friendships shouldn't be mixed. Even if you write up a bulletproof contract, your friend is going to ask if you're really going to take him to court over it.

Either do it yourself 100%, or not at all.

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gumbydamnit said:   A real estate investment opportunity has presented itself to me in the way of a short sale in a condo/Co-op in which I live.  I'm thinking about buying the unit for cash with a friend (splitting 50/50) to use as a rental.  I've never purchased a rental property and am curious to know what kinds of additional considerations should be given because of the CoOp and short sale aspect?  
  You forgot the things that buying a property with a friend brings up; especially since this is your first rental.
For starters, do you have an exit strategy in case one of you want out and the other one doesnt.

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Phase I: "But we're the best friends in the world and we would never screw each other over"

Phase II: "It's OK, I can cover the mortgage this month, he'll get me back"

Phase III: "Hmm, I'm putting a lot more time and effort into this than he is lately"

Phase IV: "How the hell did I get myself into this.."

Phase V: "I'm so screwed"

rated:
MrSamsung said:   Phase I: "But we're the best friends in the world and we would never screw each other over"

Phase II: "It's OK, I can cover the mortgage this month, he'll get me back"

Phase III: "Hmm, I'm putting a lot more time and effort into this than he is lately"

Phase IV: "How the hell did I get myself into this.."

Phase V: "I'm so screwed"

Sounds like MrSamsung is speaking from experience! :O

I think by the time Phase III comes around you realize you're in the shitter, so Phase IV & V follow quickly.

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It may seem like this will be a quick way to make some cash on the side (and it very well could be), but DO NOT let your eyes see dollar signs instead of warning signs. Try and consider this objectively:

Would you open a small business with this friend in any other context?
Would you take out a 6 figure loan to do it?
Even if you've never done anything like it before, and your friend hasn't either?
Even if you didn't look at ANY other properties before choosing to take out a loan on this one?

Edit: Some of these assumptions might not be applicable in your case (since you said you'd be paying cash) but the point is still the same - this is likely to be one of the biggest purchases/financial decisions of your life unless you make so much money that it's not really a problem.

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The property ought to trade at a discount due to it's CoOp-ness and the hassles with renting and/or financing. How much of a discount is a matter of opinion.

I'm with the others. One of you should be in charge, and the other subordinate on this, rather than 50/50. Why not just structure his portion either as a minority equity share or as a hard-money loan? Then you be in charge and make all the decisions. Or alternatively, him.

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