Hi all,
My servicing is hitting the limit due to size of portfolio and recently reduced incomes and my wife and I want a new PPR.(we currently rent)
My wife and I are thinking of asking my brother(who has NO properties) if he wants to contribute/invest.
He would not live there as he lives in a van(#vanlife is a thing) but it would give him a chance to enter the market in some way and make a return.
My wife and I have have substantial capital but low servicing.(and are not prepared to sell any of our portfolio as yet)
We would ask my brother for 20% of the Deposit funds(dep, stamps, lmi etc.) and 20% of the holding costs(rates, mortgage repayments, insurance) for a maximum investment 5 year period(and we would use his servicing to improve our borrowing power so that we can buy the PPR we would like).
The first 5 years we would have I/O mortgage, after which we would refi and give my brother 20% return on his money.
(or if we cant refi the PPR, I would give my brother a small unit I own, that he used to rent from me, depending on market value of the small unit)
QUESTION:
If we are returning my brother a 20% return because he contributed 20% of Dep and Holding costs, should it be 20% of the Capital Growth that has been made over the 5 years…………… or should it be 20% of the Market Value in 5 years?
(of course we would have an agreement with set rules/expectations and possible outcomes to protect each party in various scenarios)
Helpful thoughts, views, comments and experiences of this nature welcome. THANKS Team!
You must be logged in to reply to this topic. If you don't have an account, you can register here.
