[Originally published June 2019. Updated August 2021]
New Zealand home ownership rates are the lowest they’ve been in 70 years, with almost one in three households now renting. Combine this with increasing house prices and it’s easy to see why more and more kiwis are considering purchasing an investment property with family members or friends.
If you’re entertaining this move, it’s important to explore the pros and cons of this arrangement and discuss strategies to make the relationship and investment a fruitful and harmonious one.
If a payment is late, everyone in the group is liable for any related penalties.
We’ve worked with many groups of people who have purchased investment properties collectively. We’ve seen arrangements that are hugely beneficial to everyone involved, and ones that have ended in heartbreak.
If you’re considering investing with family members or friends, we encourage you to take the following steps before signing any agreements:
Understanding which one is best for your group is critical — we encourage you to seek legal advice to ensure that you set yourselves up right, from the beginning.
You’ll also gain valuable insight into how the other members deal with conflict resolution.
You’ll need to document the amounts that each party is paying towards the deposit and how you’ll handle maintenance or repair expenses and responsibilities.
This will prevent any one member of the group from feeling like they are shouldering more of the financial burden than the others.
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.