Partnerships

[Dylan33]

I've been offered to go halves in a property. I've done a bit of research and it looks like a pretty good deal. The other party is a real estate professional and knows the industry inside out. Has Ip's in Sydney too. They just need a partner in this one due to personal reasons.
I'm tempted as the property has a lot of potential. What would be the potential pitfalls. What should I be thinking of as far as legal issues go? Would it be hard to use equity in the future with two party's involved?

 

[alexlee]

Those 'personal reasons' are a big concern, don't you think?

 

[wobbycarly]

I'm with Alexlee.

If this is such a great deal, why would they want to share? Especially being a "real estate professional"

You need to be aware that in the future, the banks will look at you as being responsible for 100% of the debt, but only receiving 50% of the income (of which they will assess 70-75%) Partnerships can be dangerous...

 

[travelbug]

What's the exit strategy? You need to know this before you start.

Will you hold it, sell it for profit in 5years?

You need to make sure you are both on the same page with that.

 

[jezza]

The other party is a real estate professional and knows the industry inside out. Has Ip's in Sydney too. They just need a partner in this one due to personal reasons.
QUOTE]

Dylan

The pitfall is this part of your statement, his personal issue is as Wobbly points out is you will be owing 100% of the problem while only getting 50% of the return. Is this a monster developement of something, is there a major reason why 1 of you did not go in at 100%. Please I do not want to place too many dispersions on REA but I would never share my car 50% with a used car salesman just because he knows the industry. If you do go ahead with it, you would want a nice tight contract written up ( but that means nothing when 1 party files for bankrupcy) and your bank is going to want to ask a lot more questions. They would be the ones you need to be ready for

Jezza