I'm currently renting and I'm wanting to buy a house in the area to live in (because I want more space and I want my money to go into an asset rather than simply losing money I'm paying in rent). Unfortunately almost all of the properties within a reasonable commute of my workplace are beyond what I consider affordable (i.e. properties that cost 7x to 12x my annual salary), and even those that are a 40 minute drive away are still 6x to 8x my salary).
A coworker of mine, who has a lot of spare cash lying around (about 2x my salary burning a hole in his pocket), who pitched an idea that we get a joint-mortgage together, as he is wanting to invest in property due to the large up-trend in property prices in the area over the past 20 years that doesn't seem to be abating - this looks to continue as more people move to my area, and more high-profile companies move here too.
He proposed that we should combine his spare-cash (1.5x my salary) with my own savings (I currently have 1.2x my salary in savings, but I hope to reach 1.5x by next summer) together to form a down-payment on a house in the area (that would cost about 8x-9x my salary), then I would get to live in the house by myself and I would pay the rest of the monthly mortgage payments - he would contribute a portion as well as he wishes - though he would continue to pay his share of the property taxes based on the % of the house he owns. In the end, he would own about 25% of the property, I would own the other 75%. After 10-15 years' time we would sell the house and collect our equivalent share of the profits... or losses, or I might be in a position to pay-off my coworker, buying-back his share of the house based on the house's then-current market value.
It all sounds good, perhaps even too good to be true. I am enthralled that it would allow me to live in a decently-sized house without being too far from work, and neither of us are at risk of long-term unemployment or mortgage-default, so I'd like to ask you on PF if this is a bad idea, what risks there are, and if there's anything I should be aware of.
I'll add that we're also considering a new-build project, where we buy a lot and pay for construction through a mortgage (though we would presumably buy the land outright to simplify and potentially cheapen the mortgage). I'm still doing research on this option and it is looking cheaper than buying a house from someone, at the cost of having to wait for construction (6-9 months) and the paperwork/hassle involved. It looks like 6-7x my salary total cost, compared to 7-8x for a preexisting house of a similar floor-area, build-quality and location.
With a mortgage 7-8x my salary and with 3x-4x my salary as a downpayment (~40-45% downpayment) it still necessitates a 30-year mortgage, so I'm hesitant to sell at 10-15 years in case of being underwater.
We would prefer a "traditional", fixed-rate, no-surprises mortgage. We hope to qualify for a 3.50% to 3.75% interest rate.