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My wife & I did not want to stretch ourselves too much financially by buying an investment property on our own. The 2nd investor is also my wife's sister and we will either sell the property in 5 to 10 years or keep it as a holiday home as it is by the water. The reasons we are buying it are to either..
1. Aquire a holiday home to use in future years. If we keep it as a holiday home, we may still rent it out occasionally. We are concerned that with property by the water rising so quickly, we need to buy now or we will never be able to afford one.
2. Make a profit by selling in 5 to 10 years time.As I indicated in another post, I'm really wondering what my annual out-of-pocket expenses will be after all of the expenses vs rental income.
Mortgage Hunter wrote:Why are you doing it and what do you hope to achieve by investing with another person?I would only do so if I had no other options.
Ciao,
Hi. Thankyou for your reply. The plan is to rent the property for 5 to 10 years and then sell or hold on to it as a family holiday home. The 2nd investor is family. All of the legal issues which you brought up have been covered. I guess my my concern is finding out what my estimated out-of-pocket expenses will be annually after expenses and tax benefits. The mortage will be set-up as 2 separate mortgages.
brc wrote:Expected result of a joint property investment??= tears
Unless you have in writing an agreed plan on what to do when:
– one person needs to bail on the investment
– how the property will be valued if one party wishes to buy out the other. Who pays the stamp duty on transfer of the title into one name and the associated costs – is it the buyer or the person wishing to get out
– the investment holding time if all goes well
– how a decision will be made to sell
– who is going to be the primary contact point for day-to-day management of the property
– what type of legal structure will be employed
– is it to be a single mortgage in joint names or two separate mortgages.You will probably not be able to borrow against the property in the future to make more acquisitions because you do not own it outright, therefore a bank won't lend against it if you wish to purchase an investment on your own.
People make successful joint investments all the time, but only when they approach it professionally and structure themselves that way from the start. Mates who, over a beer, say 'hey let's buy a house together' usually end up regretting their decision when one goes and gets married/has kids/goes overseas/loses their job – basically has any sort of life change. I've seen it happen a couple of times.
