lifestyle clique
lifestyle clique
T hey say two heads are better than one . Have you considered pooling your resources to buy an investment property with a friend , business colleague or family member ? Or maybe you have , but you ’ ve held back because you feared entangling yourself in a loan with someone else and what that might mean to your credit rating and financial status if it all went wrong .
Well hold back no more , as there are lenders in the market today who allow two borrowers to buy the one investment property utilising separate loans . And the good news is - each borrower is separately responsible for their own loan .
These types of loans offer women who want to grow their investment portfolio the option to buddy up for success , by allowing them to split the cost of buying an investment property with someone else , while retaining individual control of their finances .
CONSIDER THE BENEFITS :
• Pooling money could allow you to expand your property portfolio faster .
• Allows you to borrow more funds than you could otherwise afford on your own .
• You might be able to buy the property you want , in the location you want , rather than having to settle for a cheaper option .
• Your credit rating is not affected by the actions of your co-owner .
• Each borrower can decide on how they want to manage their own loan repayments .
Naturally , as standard practice , each borrower needs to show they can service the loan they are taking out , but this type of loan is certainly a great option . For example , say one borrower has a sizeable deposit and the other lacks deposit but has good serviceability . In this situation buying with a buddy could be a win-win for both parties .
However , in saying that there are things to be considered .
• You should always buy with a likeminded person , someone with similar goals to yourself .
• You need to make sure you feel confident that the other partner is financially secure enough to make their loan repayments .
• With co-ownership it is also imperative that each party seeks out independent financial advice and a co-ownership agreement is in place before buying a property .
• If it all goes wrong things can quickly turn into a nightmare , so it is important to protect your position . It is recommended that you speak to a solicitor and have an agreement drawn up that is specific to your needs and situation .
The agreement doesn ’ t have to be complex , but it will require you to have rules and agreements worked out in advance – this is crucial . For example , co-owners may agree that if one wishes to sell , the other co-owners have first right of refusal to buy their share .
OTHER MATTERS TO BE CONSIDERED MIGHT INCLUDE :
• The contribution of deposit and the cost of the investment property ?
• Should a sinking fund be set up to cover repairs ?
• How long will the property be held before selling it .
• A plan to pay for unforeseen maintenance costs .
• How various insurance issues will be managed ?
• Taxation / depreciation and capital gains tax issues clarified .
• On the sale to another co-owner , how will the sale price be determined ?
• Who determines the rent payable and the tenant ?
• Will either of the co-owners live in the property and on what basis ?
• How sale proceeds will be distributed and why a sale would take place ?
• How will disputes between owners be resolved ?
Reviewing this list gives you some idea the way you can avoid any disputes down the track . If you would like to discuss the right loan for your ‘ buddy buying ’ journey or revise any of your existing investment loans just call Tracy .
There is no doubt that when it comes to investing in property , knowledge is power . Avoiding the common mistakes made by others will ensure you build a successful property portfolio
AUTHOR TRACY KEAREY
Managing Director - Home Loan Connexion Pty Ltd
www . homeloanconnexion . com . au
General Advice Warning : This blog is not designed to replace professional advice . It has been prepared without taking into account your objectives , financial situation or needs . You should consider the appropriateness of the advice , in light of your own objectives , financial situation or needs before making any decision as to whether this scheme is appropriate for you .
Women ’ s Network Magazine
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