Hey guys,
I’ve read a few similar scenarios on here, but thought I would try to get some clarity. I’ve currently got 2 IP’s looking to get a third (all buy and hold). My girlfriend has a handy cash deposit and is keen to start investing too and go 50/50 with me.
Obviously there are a whole lot of legal implications surrounding this idea, but I was wondering what the ‘common’ investing finance set up would be for people in this situation? For example if we both put in 10% ea, plus buying costs, she would use cash and I would draw on equity, but the cash obviously isn’t deductible.
I’m sure a few of you can give me an ‘in a nutshell answer’!
Thanks, John.
Just the usual joint ownership, be it in personal names or trust etc – it’s all much of muchness.
Bear in mind that if you purchase this next property jointly, should either of you want to continue to purchase any future properties separately then the banks for any future purchase will consider you to hold 100% of the debt but entitled to 50% of the rental income – which can have a significant impact on your borrowing potential.
If all purchases hereafter are joint there isn’t this issue, but it’s something to keep in mind.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
What is most common is not always the best option.
Tenants in common equal shares
Tenants in common unequal
Joint tenantsthese are the most common. But you may wish to consider a few other options such as single ownership with loans between yourselves as well as the banks.
eg. $100,000 property in your name.
$80,000 loan from ANZ
$20,000 loan from her.2 years later, value $150,000
You increase your $80k loan to $100,000 and pay her back.if done properly you have borrowed 100% and the loan is still deductible with her getting her money back.
Less messy if you separate as you only have to give her money back and not worry about transferring title.
See a lawyer.
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
Thanks for the replies guys! Very helpful information. Terryw that example is interesting as she would eventually get her cash back, I suppose your just adding a middle man to the whole ‘draw on equity, buy more plan.’
In the long run if all goes well these properties will fund retirement for the two of us anyway.
Yeah a legal professional is a must.
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