Buying property with a friend

Buying property with a friend

Unless you can access existing equity in a property, or happen to be a superstar at saving, breaking into the real estate market can seem almost impossible for the would-be property investor. Co-ownership, that is, buying an investment property and sharing the cost with a friend, can be of practical benefit, especially given the recent escalating cost of property, and the rising cost of living.

Pooling your resources with another also assists with any additional & ongoing costs associated with investment properties, such as rates, repairs, and any negatively geared mortgage gaps. To make sure you are legally covered, should something go wrong in the partnership, or should one of you need to make an early exit. Known as the pre-nuptial agreement of home ownership, a co-ownership agreement is an agreement drafted by a lawyer, which states each party’s rights and responsibilities, as agreed by all purchasers.

Prepare a written plan, including how various issues will be treated, who is responsible for ensuring payments are made, who will take care of maintenance, who will keep the books up to date, and especially the mechanism for the unexpected exit of someone. So, What kind of title will the shareholder have? The best option is known as a tenants in common, (or TIC) title. It allows you to have unequal divisions of the property, if shareholders contribute different amounts, and TIC shares can be bequeathed, plus, all shareholders are on the title.

So, What if one shareholder wants to sell the property? There are two options available should this happen. either you buy your equity partner out, or you sell the property.If property needs to be sold in a hurry, then traditionally the person wanting to exit would need to have their share discounted, if sale is at a lower price than a sale in the normal case of cashing in.

However the new trading platform for property shares called Tenant in Common Exchange, or ticX for short, offers a trading exchange for selling shares in property, and this has changed the real estate landscape, by bringing liquidity to property shares. There could be significant benefits to joining together, as this may be they only way to get started.

Discover ticx the trading exchange for property shares. www.TicX.com.au

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