Have you ever floated the idea of investing in property with other people? Perhaps a sibling, or a long-term friend or business colleague, or maybe even the neighbours have come together to consider purchasing that vacant block down the road?
The idea seems good at the time – less individual financial outlay, larger financial backing and perhaps a larger skill set that appears to transfer to a positive business relationship.
There’s no doubting that in some cases co-owning property can result in a winning investment, but, as with any investment, it’s important to do thorough research to ensure you’re making a wise investment decision.
Some things to consider when sharing an investment property:
- Time. What time frame are you and your partner/s looking at when purchasing property – in the next six months, one to two years or longer? You may be eager to expand your property portfolio sooner rather than later, so is best to ensure others are in agreement.
- Don’t rush in. While the timing is important, it’s even more important to ensure your reasoning behind buying certain property is beneficial to you. Don’t let the excitement of becoming a property investor overshadows whether it is, in fact, a good investment.
- Future plans. It’s vital that you are on the same page with fellow owners as to what you hope to achieve with the property. Are you planning major renovations or to demolish and re-build? Would you like to sell in a few years or is your plan to hold on the property for longer? Understanding others’ expectations for the property will help ensure future decisions are made with the same end-goal in mind.
- Finances. Often a touchy subject between friends, but it’s important to understand where all owners sit financially coming into a big investment such as property. You want to ensure you won’t be left covering all the costs if your partner/s run dry; or vice versa, you don’t want to feel pressured if suddenly they want to do major renovations, which you haven’t allowed for.
- Responsibility. Ensure from the beginning that everyone involved is aware of their responsibility, whether it’s initial purchase of property in discussion with banks, liaising with property managers, or taking charge of paperwork.
- Legal and Tax obligations. Ensure that everything is recorded and you gain professional advice on your legal and tax obligations when splitting ownership of a property. It’s important to have a clear understanding of how it will affect you.
- Engage with professionals. Have multiple personalities can in some cases prove tricky. Enlisting the help of a third party can help to keep things running smoothly.
If you’re looking into the option of expanding your property portfolio with others, there’s no reason it can’t be a successful coupling, just don’t jump in without doing thorough checks first.
Engaging with an experienced property manager can help take the stress of managing your investment.