Hello Everyone,
I am new to the forums, but expect me to put in my opinion in some posts and seek clarification on some things.
Context
Before I dive into my original question thought it may be best to give you guys some context. I am only 21 but am currently studying to be a financial planner (Study UTS bbus and bIT & Dip of financial planning) and will probably look at investing in property in the next 3-6 months. I work as a consultant for IAG so pretty much know the ins and outs of what is and isn’t covered under building/landlord insurance.Relating to post
Anyway for me to take this dive into the property market I was planning on investing in a property with one of my mates also keen to invest in the property market. My question is how have you found investing with a partner (outside of spouse) and how have you found the experience.
What qualities would you recommend that your investor partner / group would have?Additional Info
The reason for delay is because I believe that I should spend some more time researching and educating myself about the property market. SOO I was wondering what books you have found has helped you. Below is a list of books I already read and need to read. Because I am doing my diploma of financial planning in uni break there is a lot of books I need to read. I tend to read the books at least twice before moving onto another.Read
Rich Dad, Poor Dad (Robert Kiyosaki), The Intelligent Investor (Benjamin Graham), Barefoot Investor (Scott Pape) The richest man in Babylon (George Clason), Awaken the Giant within (Tony Robins), How to win friends and influence people (Dale Carnegie), 7 Habits of highly effective people (Steve Covely) + Lots of sales books.Have but need to read
Money: Master the game (Tony Robins), 0-130 properties in 3.5 years (Steve Mcknight), 0-260 properties in 7 years (Steve Mcknight), Essays of Warren Buffet, Think and Grow Rich (Napolean hill), Art of War (Sun-Tzu), The 10x Rule (Grant Cardone), The wealth of nations (Adam Smith)Thanks if you took time to read this.
All the best,
Matt
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This topic was modified 8 years, 4 months ago by
Sherzza. Reason: Highlight
Investing with another person? I’ve got some great advice.
DONT. DO. IT.
No upsides, a whole lot of downsides. You don’t gain any real benefit from this, other than reducing your ability to borrow, tie up your ability to make investment decisions, leave yourself open to changing circumstances (what if one partner decides they want to sell – tax issues, you might not be able to buy them out etc).
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
I’ve seen lots of successful partnerships in the UK (now I’m in Brisbane looking to partner and looking to invest). Generally they’ve been successful because each person is bringing something to the table the other wants or needs. For example, one person has money but no time or knowledge on finding deals… another example, a builder and investor… one has skills and the other has business acumen.
Understanding and confirming the intention of the partnership and the exit strategy are key.
Corey makes some good points but in my opinion problem partnerships are a result of poor up front planning and communication. Find the right person/ people, get your documentation squared away and go for it.
Mike
Email MeAgree with Corey not much upside at all.
You can always engage the services of a consultant for most things and that is likely to be a lot cheaper for you that a profit share.
Certainly will hinder your borrowing capacity and like anything even the best laid plans can go astray.
In Brisbane I used to get a call a week from a forum member asking me if I was interested in partnering with them on a development project etc.
I can’t see the benefit for me under any circumstance.
Cheers
Yours in Finance
0-40 properties in a decade. Ask me how.Richard Taylor | Australia's leading private lender
I’ve seen lots of successful partnerships in the UK (now I’m in Brisbane looking to partner and looking to invest). Generally they’ve been successful because each person is bringing something to the table the other wants or needs. For example, one person has money but no time or knowledge on finding deals… another example, a builder and investor… one has skills and the other has business acumen.
Understanding and confirming the intention of the partnership and the exit strategy are key.
Corey makes some good points but in my opinion problem partnerships are a result of poor up front planning and communication. Find the right person/ people, get your documentation squared away and go for it.In theory yes it’s all just about finding a ‘good’ partner. In reality the way the taxation system and finance system in Australia are setup you are penalised for being in a partnership. Any changes in structure can trigger substantial taxation liabilties, joint debt ownership of investments is HEAVILY detriminental to your future borrowing capacity etc.
The only way you can avoid these two major issues is to have joint borrowings for ALL debts for life, never dissolve or alter ownership and do not expect to borrow solely in a personal capacity. Let’s have a guess how many partnerships can fit those parameters outside of a spousal relationship?
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Thanks for that Corey. I hadn’t really considered the tax implications or downstream issues that you have pointed out.
I’m going to take a leap and assume the OP’s issue is coming up with the money – ie, 2 people have more than one… what do you think the OP should do – wait it out? Keep studying until he has enough capital to go it alone?
Mike
Email MeI am loving this information thanks guys. Mike what you are saying is true I am asking about partnering mainly for the deposit to put down and because I study at uni, and work part-time will take me around 6 months to save 10-15k and was seeing if there was any benefit going in earlier with a partner sounds like it would be a whole lot easier to do it on my own. This forum has a lot of great things to look for when searching for property so looking to soak up as much as possible to and try and learn from others mistakes.
Shezza not sure where you are looking at buying but you will need to save a lot more than 10-15K for a deposit.
You mention you wish to invest in property so on that basis assume it will not be an owner occupied property.
Minimum deposit would be 10% of the purchase price plus acquisition costs.
On a 300K property you would probably need something nearer to 55K-60K.
Cheers
Yours in Finance
0-40 properties in a decade. Ask me how.Richard Taylor | Australia's leading private lender
Think of the dangers that are out of your control
death
family law
incapacity
bankruptcy
running awayof the other person.
I had a client approach me where the female invested in a property with a boyfriend. She used her parents house as security for the purchase. After a year or so the boyfriend did a runner. She had to keep paying the loan as if she didn’t her parents house was on the line. The house they bought had dropped in value as well. When an owner disappears the property cannot be sold as they will need to agree to sell it. So an application to the supreme court is needed to appoint a trustee to sell it. This will cost around $40k. But as it has dropped in value the sale price wouldn’t meet the loan amount. So the only way to discharge the mortgage would be to pay the bank cash, or to keep the loan going secured by the parents property. This means the parents couldn’t sell while the loan is going.
If the property had suddenly increased in value I bet the boyfriend would have resurfaced.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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This topic was modified 8 years, 4 months ago by
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