Hello investors. I am interested in renovating older properties and flipping them for profit. I have spent a lot of time reading and researching and now feel that I am capable of making good decisions and selecting properties that will be suitable. I have been considering entering into a partnership with someone who shares my interest in renovating and has a good skill set, but like me, has no experience with buying and selling property except our own residence.
I would appreciate some advice about the benefits and difficulties of undertaking such ventures with a partner. I realise that while two heads are better than one, I will halve my profit. My rationale is that I will also be able to do more of the work myself saving money on labour and enjoy the experience more. Any thoughts?
Thanks, Matt
-
This topic was modified 9 years, 3 months ago by
MatthewM.
I Matt
You will also half your ability to service for other loans, since on a joint loan, you own half the property but all the responsibility to repay the loan (the bank will expect you to stump up the loan repayments in full if your partner doesn’t pay their half).
When you say you are looking for a partner who has experience buying and selling property, what do you mean? Do you mean you are nervous about the legal process and would feel better after one or two properties, or do you mean you are thinking you’ll do your selling without a sales agent and are looking for people with appropriate marketing skills, or other?
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thanks for your reply Jacqui, let me clarify. I have someone in mind to partner with who is like me, he’s starting out. I am mostly concerned that at the end of a renovation project, I may feel that all the hard work was not worth it when I am only keeping half the profit. The attraction is the clear benefit of working faster and having extra motivation and team momentum.
I guess what I am really asking is… when renovating and flipping properties for profit, is it better to work hard alone and keep the spoils or to share the work load and split the gains.
It depends on whether you can afford to do it alone, whether you would enjoy renovating alone or not, whether what is more important to you about the project is the companionship or the profit, etc.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
I have someone in mind to partner with who is like me, he’s starting out. I am mostly concerned that at the end of a renovation project, I may feel that all the hard work was not worth it when I am only keeping half the profit.
There are a couple of other things to think about;
1. You are both new to property investing so mistakes will be made. A better situation is to partner up with someone experienced.
2. Its important to have a solicitor draw up a partnership agreement to put some framework around who is doing what in the partnership and for what reward. Believe me, everyone has the best intentions in the beginning but often interpretations and expectations can be different- and often people don’t realize this until there is an issue. You will likely have to revert to the agreement as the referee.
3. Re: not knowing if the work is worth only getting half the profit. If you are only doing half the work then this is not an issue if the deal stacks up in the first place. You should have a minimum return that you are looking for with each deal.
Chris White | Pillar Property
http://www.pillarproperty.com.au/
Email Me | Phone MeThe Property Investment Specialists
-
This topic was modified 9 years, 3 months ago by
You must be logged in to reply to this topic. If you don't have an account, you can register here.
