Investing With Colleague - JV???

Hi All,

i have a colleague of mine who is looking to invest in some property - and was wondering if anyone has invested with friends before and what are the pitfalls/good points?

he has got $400k equity, and wants to use some of it to build a house to on-sell.

We both work in the building industry - and obviously it would half the risk, but then I am thinking that nobody ever forged a path being 'too safe'.

thoughts?
 
Build a house to sell-on

Hi, you say you both work in the building industry, what do you both do and have built a house to sell-on before? Thanks for your time, Jason.
 
Hi, you say you both work in the building industry, what do you both do and have built a house to sell-on before? Thanks for your time, Jason.


I sell houses for the builder - and my colleague is a production estimator in the business so from both angles we get good coverage - I know what people out there are requesting for a new home, and where... and he can work out the best supplier for maximum profit...

We have not built to on-sell before, but have obviously built before!
 
I have 2 joint ventures with a long standing friend. We have the same philosophy of buy/rent/hold. Helps if you both want the same goal. We discuss absolutely everything and have known each other for over 10 years and are best friends. Pitfalls could be that one of you changes your mind and wants out earlier than the other, you have different goals, or your financial situation changes.
 
I have 2 joint ventures with a long standing friend. We have the same philosophy of buy/rent/hold. Helps if you both want the same goal. We discuss absolutely everything and have known each other for over 10 years and are best friends. Pitfalls could be that one of you changes your mind and wants out earlier than the other, you have different goals, or your financial situation changes.

Suppose that happens ... we no longer have the same goals. Surely there must be a way to 'buy out' the other holder??? Assumedly you would need to service the loan?

Anyone had this situation?
 
Hi AK,

It can be somewhat awkward to retain a friendship, long after financial deals are struck and properties bought & sold. If you really want to proceed together, I'd get a formal Instrument of Agreement set up to cover all aspects of your business relationship; a solicitor should be able to assist here.
 
Suppose that happens ... we no longer have the same goals. Surely there must be a way to 'buy out' the other holder??? Assumedly you would need to service the loan?

Anyone had this situation?

Yes, as long as your in a position to buy him out. You would have to agree on price, and hope that he doesn't come to you at an inconvenient time ie. when your wife's just had another baby, you've just signed the contract on another IP of your own etc.

Not saying don't do it, just be aware of the different eventualities.
 
I sugget you both agree on a planned exit stratagy, as your goals will change
over time.There may be marriage problems/health issues/a death of a child/poor investment decisions in other areas or a re assessment of one life.
put everything in writing before hand and do it legally.

Dont even assume basic things.
What happens if you cant agree on an issue but wont compromise?

I was told the only ship that doesn't float is a partnership.......I don't believe this , but if not done properly you could loose everything down the track.

Depending on your colleague it could be a wonderful opportunity.
 
Back
Top