Hi all,
I have been interested in property investing for some time now, and have recently decided to kick off my investing journey with a friend. We know little in regards to the setting up a partnership, and would like to get some advice on what other people have done. We also require good asset protection with what ever kind of partnership that we set up. We are also currently looking for a good accountant in the Adelaide area that can also offer some much needed advice, so any recommendations of a good one would also be appreciated.
Look forward to any advice that can be offered
cheers,
chris
Hi panno24,
Why are you purchasing with a friend? Don’t try and overcomplicate things with a structure at an early stage as it can hamper your ability to borrow money (banks don’t like complex things). Have you spoken to a broker?
Forget the partnership thing. Disaster waiting to happen. By all means work together but stay financially separate.
The Freckle
Buying with a friend can be tricky. I'll assume you are thinking of doing this as you have limited funds (or borrowing capacity).
Assuming you want to buy an investment property. Before you go any further sit down and discuss what you want to buy. How you will split the purchase costs, ongoing expenses etc. You need to have plans for if- one person loses their job, gets married and wants to sell etcetc. What are your long term goals? Keep it then sell in 5 years? Renovate and sell? It can get tricky if one person has cash and the other doesn't. If one has a higher income the other may feel they are missing out on the tax deductions.
I could go on forever (sorry). Just trying to avoid a catastrophe before it starts.
Now partnerships can work as long as you plan for as many situations as you can think of.
As the others said I wouldn't get too carried away with partnerships etc unless your friend is likely to be a life partner.Maybe just buy something tenants in common with a clear exit strategy (in writing). This simple thing can save much heartache.
If you have the capacity to go it alone, that would be the preferred option.
Hi Chris
Firstly welcome to the forum and I hope you enjoy your time with us.
I wont start by giving you a lecture on why i wouldnt buy with a friend as i am sure you have heard all of the stories before.
So many of these arrangements have ended in tragedy and the parties are no longer friends.On a more upbeat comment if you go into the arrangement with your eyes open and the loan structure is set up correctly Yes they can work.
Unfortunately there are so many lending pitfalls you need to be aware of so suggest you get some Professional advice here for that.
In the main lenders will want to consider both of your incomes and liabilities and whilst this may not appear an issue if one of the parties decides to purchase again separately this can cause serviceability issues unless you use the right lender.Definately get some good Accounting advice as i wouldnt be buying in Partnership but would use a Trust structure.
Again what type of Trust and the Trustees will need individual consideration.Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
If you're still looking for an accountant, a few of the members from PI.com that are based in Adelaide are using Kohlhagen Group (http://www.kohlhagengroup.com.au).
Kevin.
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