Buying property with multiple partners?

[LucasK]

Just wondering, has anyone tried buying property with several partners?

Since I'm not a registered income earner (university student with side business), I thought it might be worthwhile.


Basically, the plan is to convince 3 of my friends to pitch in for a 2 bedroom property near the university, which would be leased out (not sure if home buyer's grant covers the fact that only 2 out of 4 purchasers will be living in property).

A contract would specify that the property can only be sold with the explicit agreement of all 4 parties. Otherwise, once paid off, the income from the property would be divided evenly amongst all 4 parties (and expenses).


Would this sort of agreement work, provided that it is possible to convince the other parties to do so? Also, can anyone point out any flaws that such a contract could have?


Thanks,
Lucas.

 

[Aceyducey]

Lucas,

I don't think that both owners living in the property can claim first home owners grant - but could be wrong.

Unit trust sounds like best approach to me, however bear in mind that your friends may not be as set on the same goal as you are & may have different ideas as to their own best interests in a few years.

Everyone in this arrangement has to protect themselve legally - this will save some potential strain on the friendships if someone decides to change directions (ie: liquidate their share to travel, or buy their own place or can no longer afford payments if the place is or becomes neg geared or wants to take their capital growth profit out of the structure).

Also you may have some difficulty using this property as security for further loans (asuming you get the initial loan) due to the number of interests.....banks would be cautious - what if all 4 of you took out second mortgages or LOCs on the place?

Cheers,

Aceyducey

 

[agent007]

Lucas,

Do a search and you'll find plenty of information in this regard.

It's possible. However, every "partner" would have to have their own solicitor and the contract would have to specify sevarl things like what happens if someone wants out at any particular time (among other things). Also, such arrangement will usually affect wills, power of attorneys, etc. Take also in account that everyone will need Life and TPD insurance incase someone dies or become incapacitated.

As you see, this structure requires more work but, it is possible. Also, it could be the best way to lose a friend

Good luck,

James.