- ettyMember@ettyJoin Date: 2007Post Count: 23
I'm looking to buy an investment property with a couple of partners (not related) and have no idea of the potential problems or pitfalls in this strategy . If anyone has any ideas , suggestions, experience I would love to hear from you
Thanks EttyducksterParticipant@ducksterJoin Date: 2004Post Count: 1,674
I have not done a joint venture but I am planning to get into this sort of thing down the track.
The pitfalls are more to do with being prepared in case something bad does happen
With an agreement it makes a bad event not so bad as everyone knows how this will be handled.
but what you need to consider
!. What if one of you die how does this affect the investment
2 What if one of you divorce how does this affect the investment
3. What is the time frame of the investment
4. If the investment makes a loss how is this going to be handled
5 if the investment makes a profit how is the profit divided between the investors
6 What special skills does each partner bring to the venture.
7 How much does each participant invest into the venture
8 what ownership structure are you going to employ. Unit Trust, Hybrid Trust or just a tenant in common ownership.
9 What if one of you pulls out of the investment early how is this catered for.
10 Do all partners really have the financial means to cough up the cash once you are committed to a contract to buy a property?
Discuss these issues with all partners and then
GO to a commercial lawyer and get a joint agreement contract drawn up.TerrywParticipant@terrywJoin Date: 2001Post Count: 16,213cubman09Participant@cubman09Join Date: 2009Post Count: 37
Terry is right. This could be a major stumbling block especially if it gets nasty. Have seen it happen before.
Have an exit strategy in place as that party who doesnt want it anymore may stop making payments etc. Caution and your due dilligence should be paramount.
AMJacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539
Quite. Even if everyone starts with all good intentions, people can have a change of circumstance during a project. Here are a couple of scenarios:
– a project partner could run into some marital trouble and wish to get divorced. Under such circumstances, he/she might hope to pull his/her money out of the project at a time that is not particularly convenient to the other partners.
– heaven forbid it not happen, but let's say a partner takes ill and passes away. Depending on what type of joint arrangement you have, it might be the case that by default, all other partners immediately inherit equal portions of that person's share. Or it might be the case that the partner can leave his or her share to a beneficiary. Suddenly you find yourself working with a partner you've never met before. This person may not be able to offer the same skillset to the project that the original partner had.
that's just a couple…TerrywParticipant@terrywJoin Date: 2001Post Count: 16,213never too lateMember@never-too-lateJoin Date: 2009Post Count: 18
I could be game. My criteria would have something to do with a certain time frame factor, no exceptions…Ie, everybody knows they have super to look forward to but cannot access it, same for this type of project. Two /three years contracted maybe…Quick turnaround.