With the increase in housing prices over the past few yeas and the recent changes in LVR for investment properties, more and more people are considering purchasing an investment property with a group of family members or friends. In today’s post, we’re going to explore the pros and cons of this arrangement and discuss things you can do to make the relationship and investment a fruitful one.
The main benefit of purchasing an investment property with other people is that it lowers the financial burden for each person. When you jointly own a property, you are able to share the cost of the deposit, mortgage payments, transaction costs and ongoing maintenance expenses. For many people, co-ownership can help them get on the property ladder sooner than they could on their own.
Assuming you have a healthy relationship with the people with whom you are buying the property, then you’ll be able to troubleshoot any issues together. If you choose to manage the property yourself, you’ll have a group of people available to respond to tenant concerns and handle property maintenance and repair needs. When issues arise, you’ll be able to find the best solution together.
Homeownership in itself is a complicated process and investment properties that are rented out to tenants bring an additional level of overhead. The biggest risk of investing in property with other people is that one person in the group could default on their mortgage payment. If a payment is late, everyone in the group is liable. Another problem that can occur is when one person wants to sell before the others are ready. Lastly, there’s always the risk that the arrangement could sour the relationship and result in bad feelings among family or friends.
Over the years, we have worked with many groups of people who have purchased investment properties collectively. During this time, we’ve seen arrangements that are hugely beneficial to everyone involved and ones that have ended in disaster. If you’re considering investing with family members or friends, we encourage you to do the following before signing any agreements:
If you’re ready to move forward with the purchase of an investment property with family or friends, we encourage you to contact us today. Our team understands the ins and outs of joint property ownership and can help you find a property that meets everyone’s needs. We can also provide you with the referrals necessary to help you get set up properly and ensure your venture is a success.