All Topics / General Property / Buy out the parents share or buy another property in the current buyers market??

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  • Profile photo of skips80skips80
    Member
    @skips80
    Join Date: 2011
    Post Count: 2
    February 15, 2011 - 10:18 pm

    Hi everyone,

    My first post. I currently own an IP with my parents in a 50/50 share. The property has some equity which I would like to access for future investments. Can anyone please tell me if it would be better to buy the parents out of their half before I consider any future purchases. It seems that the banks wont let me access the equity without the parents being involved in the finance at the very least as guarantors. I’m thinking it would be good to get out on my own with the ownership but this will set back any plans for a new purchase and I would like to take advantage of the current downturn in the market to buy.

    Any thoughts are appreciated.

    Thanks.

    Joel

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544
    February 15, 2011 - 10:42 pm
    skips80 wrote:
    It seems that the banks wont let me access the equity without the parents being involved in the finance at the very least as guarantors. I'm thinking it would be good to get out on my own with the ownership but this will set back any plans for a new purchase  Joel

    Hi Joel,

    Ongoing finance and refinance can be an issue when there is 'mixed ownership' as per your situation. This is why I consider 'mixed ownership' as an option of last resort unless there is some form of 'partnership' in place which extends beyond a single property. Even this can be problematic if the partner goes bankrupt on the side without your knowledge.

    Now I am assuming you are relatively young and 'needed' your parents to help you get started. They have done this so be grateful. Now is the time to buy them out, thank them for their assistance and bide your time.

    This is not a race and those opportunities you see will be there at a later date.

    Profile photo of skips80skips80
    Member
    @skips80
    Join Date: 2011
    Post Count: 2
    February 16, 2011 - 2:41 pm

    Gday Derek,

    Thanks for the prompt reply and your advice. I was already leaning in the direction that you suggest so I think that is the way I will go forward from here.

    I am 30 so still relatively young and the property was actually bought about 6 years ago, prior to the Western Australian boom and was at the time of purchase actually a four way split with the ex girlfriend and the parents. It was definately a great way to enter the market at the time as neither my girlfriend or I had the ability to gain finance on our own. I have made money off of the property but at the same time its going to hurt to have to pay out the costs involved with removing the remaining coowners in the property, having amicably bought out the ex girlfriend only 15 months ago.

    Oh well, I put this down to the learning curve that is property investment!!

    Thanks again

    Joel

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