howdy,
as i’m sure i’ve said before, i’m a 19 year old student who is working part time. I’m almost ready to buy my first property but i’m trying to decide whether a partnership with a friend is the way to go… we have talked, and we both have similar goals.
So as not to blow the 12,000 first home owners grants, we would like to work together. We would first buy a property in his name, live in it for 6 months to year and a half, and then sell or rent it, depending on what the property and rental market is like. We would then move onto my property and do similar, whilst doing some basic renovations. The problem is as follows:
the property type he is interested in is in a certain area (if anyone knows the caulfield region in melbourne) you’ll understand my issue, which is property prices. We looked at a couple of units today and they were small, run – down 2/3 bedroom. In short, not the ideal place for us to live for the 6 to 18 months. I would possibly look at something a bit further out, in a suburb that is still growing, but were prices are still reasonable.Finally, my question is, what is the value of a property partner? What advice can people give me?
Am i better of looking at investing myself, ie saving an extra 20k before starting? will i need to forfeit the 12k first home owners grant?any advice would be great
thanks,
giladHi Gilad,
Partnerships could work if you have a strong partnership agreement.
What happens if 6 months down the track, you decide to sell but your partner refuses or vice-versa? What happens if one of you default on the loan? All conditions need to be included in the agreement.
I recommend partnerships for one reason only – more buying power. Other than that, I will never get into a business partnership again unless its with my wife – when she comes along…hehehe.
I don’t see much growth in the Caulfield area. Mostly the older generation are there and its only good for the racing – attracts many ppl.
The value of a property partner can go either way – it can be the best thing thats ever happened to you or the worst.
Why will you need to wait till you save $20k before investing by yourself. If you have $10k + the home owners grant of $12k, you can purchase an investment upto $170k.
Kind Regards,
George.
P.S: I just emailed you.I’ve found a way to help you save and earn whilst not selling or delivering any product. If interested, drop me an email or PM me to find out how
thanks for the reply,
the problem with finding a property like that, where i use the first home owners grant, is that i have to live in it for 6 months at least. Otherwise i don’t qualify.
This is both good and bad. It means that the property has to be in a reasonable area, one where i can live in it and share it with 2 other people i know (so there won’t b problems). I feel this would be too hard b/c i would have to move into the outlaying suburbs and it would be to much of an inconvenience. Then the second option is to not live in the property. Just make it my postal address… I don’t know… maybe thats not ethical?
please help,
thanks,
giladgilahd,
You had Steve McKnight’s opinion on whether your plans are ethical or not, but still you are asking. Perhaps you want someone to tell you to go for it, so you can feel good about it?
You develop your own sense of ethics in this world. Some people say there is no such thing in property- it’s all about the numbers. It’s up to you- you know the difference between right and wrong, right?
kay henry
Yeah, i get what you and steve are saying. But i honestly don’t know if i believe it is wrong??
Thats why i am interested in other peoples opinions….any advice would be great,
thanks
Here’s the way I work it out, gilad… anything that I worry about the ethics/principles of… is porobably wrong. When something’s right, we never have a second thought. When the conscience gets pricked, it usually does so for a reason.
Talk to your parents about it if you’re not sure. They’re generally the ones where we get our ethics from anyway.
kay henry
as i’m sure i’ve said before, i’m a 19 year old student who is working part time. I’m almost ready to buy my first property but i’m trying to decide whether a partnership with a friend is the way to go… we have talked, and we both have similar goals.
goals are great – what deposit do you have, and how much income?
cheers
Brendan Heagney
Mortgage Broker
07 3240 4815I’m looking to save up a $15 to $20k deposit over the next 6 to 8 months… already started my savings.
I also earn about $15k a year.
I don’t know, maybe this isn’t enough for an investment?? but with the $12k fhog it should be enough for a $200000 property?
not sure…
sounds like a good idea, just have an agreement in writting on what happens when/if one of you wants out etc.
Terryw
Discover Home Loans
North Sydney
[email protected]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
yeah, i guess. we just have to work out if it is in both our interests… at first, i thought i wouldn’t succeed by myself. I had looked at steve and dave as an example and they work together for their business partnership.
But, i’ve given it a bit of thought. i think that in the long run, i’d probably rather be in it by myself. My decisions. My money. My problems (hopefully won’t be any).Does anyone on the forum invest by themself? Please tell me a bit about how it goes…
thanks
Ok this is a bit tricky to explain so I will do my best.
If you buy a home for $200K with a partner.
You both own 50 of the asset and are entitled to 50% of the rent.
Here is the kicker. When you then go for your next mortgage the bank will assess you at getting 50% of the rent and having 100% of the debt.
You are both jointly and seperately responsible for the debt.
This is a huge brake to future growth and the number one reason I wouldn’t even consider doing it myself aside from the issues that normally go with a partnership.
Hope this makes sense.
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985NODOC Loan – 65% Loan – No questions asked! 6.85% Rate!!
Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Ok this is a bit tricky to explain so I will do my best.
If you buy a home for $200K with a partner.
You both own 50 of the asset and are entitled to 50% of the rent.
Here is the kicker. When you then go for your next mortgage the bank will assess you at getting 50% of the rent and having 100% of the debt.
You are both jointly and seperately responsible for the debt.
This is a huge brake to future growth and the number one reason I wouldn’t even consider doing it myself aside from the issues that normally go with a partnership.
Hope this makes sense.
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985NODOC Loan – 65% Loan – No questions asked! 6.85% Rate!!
Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Sorry I didn’t fully understand your post Mortgagehunter. I’m interpreting it as you saying the it’s better to not be in partnership??
Thanks
InfiniteThat’s a good point Simon makes. Being in a partnership hurts your serviceability. This is because each person is responsible for the whole debt – not half as you would expect.
Terryw
Discover Home Loans
North Sydney
[email protected]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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