Hello all,
Question here from a newbie. I am looking to start investing in property with my friend and I am looking for some advice as to the best way to set up a business/company. We are looking for a long term agreement hopefully buying a number of IP. The split is 50/50 and we will share all the risk/reward evenly.
Just so you know I have considered all the risks in going into business with this friend and I am happy with that side of this. I am now trying figure out the best way to structure the project. We both earn decent money about 100k a year and we are going to start the first purchase by contributing in 25-50k each.
Looking forward to receiving some learned advice
JMag.
Prob your best method is to purchase property/land were you can develop and end up with a couple; 2 at least or more homes at the end.
That way you can each have your own independent home with separate mortgage and separate security at the end of the project.
then it's your choice if you wish to do another project again.
Things start to get difficult when one person wishes to sell another to keep, one gets married, the other wants to draw down equity, where do you keep your LVR levels.
With 100k a year income. I would 100 percent rather go myself if I was a buying a single home, or Doing a renovate to hold.
anything that you want to sell is fair game for a JV. Or as I said before at least 2 new homes resulting for the Joint venture (JV)
Depends on any other debts you have owing how you would structure it.
If it was me with 200k income. I'd be looking at small subdivisions, keeping original home and subdividing and building 2 or more dwellings (total 3) if its your first time.
How do you know you have considered 'all the risks'?
What about
death
incapacity
divorce
insolvency
efftects on future borrowings
guaranteeing loans
director duties under the corporations act and common law
etc
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks Terry,
That's my question I guess. I am looking for advice as how to set up the venture, do we start a company together or another way entirely different etc… Im assuming if this is the case we then have some sort of agreement drawn up to detail the above possible circumstances and the many more I am sure would need to be covered.
Your advice would be most appreciated.
Josh/Joah
You might want to consider a unit trust or a company, depending on the circumstances – or maybe own names.
Whichever way you should have some written agreement – shareholders agreement, unit holders agreement or just a joint purchasers agreement. This should cover as many what ifs as you can think of – what if he wants out and you cannot afford to buy his share for example.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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