Hello,
I am new to this forum and have a question regarding purchasing property as a group and what is the best way to go about it. (Hopefully I am posting in the right area)
As a group of 3 couples we are looking to purchase a property and would like some advice or direction on what would be the best way to set this up. Is it possible to get a loan as the whole group applying as one? I have heard that this may be possible as a registered company with everyone listed as directors but not sure of the advantages, disadvantages and risks. Does anyone have any suggestions on where to start or even find out?
As said previously I am very new to this and thought this forum would be a great place to start and get some advice. Appreciate any help you can offer.
Thanks
Craig.
Craig
There are a couple of ways to do this however i guess each party will want something different from the deal.
Depending on how long you intend to hold the properties determine the type of structure you may wish to use however either a Discretionary or Unit Trust structure maybe a good starting point.
Financing the deal will be a little different as each party (Director or Trustee) will be jointly and severaly liable for the entire loan. Each partners existing liabilities, income and expenditure will be considered so if each couple has a differing asset base then there maybe some inequality.
More information would be needed to provide further assistance.
Richard Taylor | Australia's leading private lender
Hi Craig,
This is a great way to get started in property investing as long as everyone is on the same wave length. The Unit trust structure is a good place to start. Financing is quite easy to do but I'd recomend engaging a broker to do all the work for you. It is most important to set down the groups goals in writing so everyone is working in the same direction. Get some kind of agreement drawn up by a solicitor. Things do go wrong when going into business with other people even if they are friends and it can be very messy when friendships are involved with money. I was involved in a property investing group awhile back, there were 8 units involved (four couples and four singles), we put in $2,000 each at the start then added $200 each every month. It wasn't long before we had enough to purchase the first property. Within 18 months of starting we had three properties and a bank balance growing. We met each month to discuss investing. present opportunities etc. Everyone was keen when at the meetings but nothing would happen in between meetings, in the end it was just a couple of people doing all the work including working bees at propeties. In the end everything was sold and the group disbanded. Pity as the business would have had 15+ properties now.John
You would want to minimise the number of guarantees as much as possible. I think structuring it through a discretionary trust with a company as trustee may be a good idea. it is easy to add or remove directors without having to sell or transfer title and you can limit the number of guarantees by limiting the directors. One down side is possibly more land tax and losses cannot be offset against personal incomes.
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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