I am looking at asking 7 of my family members to contribute $10,000 each and forming a company to buy IP’s.
Should we purchase our first property with this $80000 outright then purchase other properties with a loan and sink the profit of the first IP into the second property or should we borrow money and purchase a few IP’s.
We are looking at buying in regional NSW.The family members have agreed to put their $10000.00 into this plan for a 5 year period. Under no circumstances can this $10k be released within 5 years and all profits go back to the business.
After 5 years we renegotiate.[suave2]
Some comments:
Careful which entity you buy properties in, eg, companies are not entitled to the 50% CGT discount.
Mixing money and family has been known to cause problems, not always, but often enough. Setting up a proper structure will cost some $$$.
The beauty of property as an investment lies in the ability to leverage into it. Buying it outright loses this key advantage.
$10k each is not far off every family members being able to invest in a county property on their own.
It is not really the right time to buy country property IMHO unless you’re thinking of WA country. The rest of Australian country property has pretty well had it’s growth this decade. Remember the “ripple” theory, booms start near CBDs and travel out, and the next boom even near CBDs is still some way off on the Eastern seaboard.
Woah, 7 family members to invest together, sounds like a disaster waiting to happen!!! So, how would it work? Would one person be appointed to make all the decisions and be responsible for administration or a group effort like a board?
I just know it can be a struggle to agree on one property with your partner let alone 7 other family members. Unfortunately, family can get pretty emotional particularly about money.
Hope it all works for you!
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