Why We Never Put Both Our Names on a Property

It’s the question of the day, and we get it more than almost any other: why don’t we put both of our names on the same house?

It’s a fair thing to wonder. We’re married, and roughly 90% of our real estate is owned in different names and entities. So here’s the honest answer, and there are two reasons.

The number one reason is debt load, and the math surprises people. Say we both own a home that’s worth $2 million. The way it gets calculated is: $2 million in debt on Christal’s credit and $2 million in debt on Allen’s credit. It’s not split in half, one and one. It’s the whole amount, twice.

What we like to do is the other way. Put it in one name, $2 million, and that frees the other one of us up to go get other good debt. That’s what allows us the freedom to grow.

There’s no reason for both individuals to be on it. The benefit of marriage comes in many ways, but one of those benefits is that if you have the means, you don’t want to tackle and hold each other down with the same debt. So we split it off. Allen holds one piece of debt, Christal holds a separate piece of debt, and that way, we have more freedom to take on more debt should we need it, based on how our credit is available to carry it.

The second reason is that it hedges against a challenging market. Allen’s been in real estate for 25 years, and he remembers when the market actually crashed. Markets soften and pull back from time to time, and where you live changes how much. Timing them is difficult, which is exactly why you want to be structured for one before it happens.

But back during a real crash, there was a client who had a house in one of their names. We don’t know why it ended up that way, but it did. The market pulled back, and they had to short-sell the property. The husband didn’t have a property in his name. So when the market pulled back, he was able to use his name to reset the two of them and go buy a property in a market they really wanted to be in.

That’s the whole lesson right there: When the market pulls back, that’s when you want to be in a position to purchase. If both names had been on both properties, both of them would have been encumbered. Anything bad that happened to that one property, any debt on it, and they wouldn’t have been freed up to take advantage of what came next.

We heard that story and thought, huh. From then on, it’s been your name, then my name, then your name, then my name. That’s just how it’s worked over the past 20 years. You want to be in a position to buy and sell in any market.

And we’ll say the part people push back on. We don’t even put names on deeds. That’s what wills and trusts are for. We know some people hear this and think, but I’m married, I want my name on everything. What if we get divorced?

We don’t make financial decisions like that. We make decisions based on us being together, us staying together, and us doing the things we need to do. That’s what clients who are in genuinely good financial positions do. They don’t hedge themselves on what if we’re not together. They make decisions based on we are together, and we need to make financial decisions for the long term.

One thing before we wrap up: this is what has worked for us as real estate professionals, and it isn’t legal, tax, or financial advice. Debt, title, and estate decisions depend on your situation, your lender, and the laws in your state, so talk to your own attorney, CPA, and lender before making moves like these.

That’s the answer. If you have other questions like this one, drop them in the comments or send us a message, and we’ll be more than happy to unpack them. Call or text us at (703) 991-7900, email us at info@ajteamrealty.com, or visit ajteamrealestate.com.

We have the dream. We have the address. See you soon.