Joint Property Ownership (among friends)

[Maelly]

My two friends and I (3 people) are seriously considering jointly buying property/ies to let (We understand the pros and cons of the buy-to-let market, so no lecture here:p).

What we would like to get advice on is whether this is a viable option, what are the basics we need to know, pros and cons etc...

We would like to buy and let for about 3-5 years. "If it works", we could add 1 or 2 more properties during the course of that 5yrs. Our main goal is to raise enough funds to put down as a deposit for our "dream" houses in 5 years time or so.

We have set up a date to go speak to the banks about the option (joint ownership) and also speak to real estate agents/ developers.

Comments and views

Thanks

[Venomous]

it might be better if a trust or company is set up to do this through rather than just doing it yourselves. Or at the very least a good legal contract.

Also remember that the banks will always want their money so if one person can't keep up with the payments for whatever the reason the others will have to cover that person's share as the bank will list all of you for bad payment if payments are short or not made...

[JIMMYtheSKULL]

I have heard about this type of setup, and it was a success story, hopefully your group of friends are as dedicated. I reckon it can defnitley work just be sure to see a atourney and have all necesasry documentation in place if somthing goes wrong. You never know if someone will loose there job, become disabled or somehow not be able to fullfill there commitment.

[3p1c]

Business and pleasure? Never a good idea, unless your planning on having new friends in 3-5 years

[sn3rd]

I'd advise getting a very comprehensive contract drawn up. Some things to make clear are what happens when someone skips on a payment, or what happens if someone wants out.

I recently had such a contract drawn up with Deneys Reitz. Unless you specify otherwise, you'll likely get a boilerplate contract, so it's important to sit down amongst yourselves beforehand to discuss as many fine details as you can. Then when you meet with someone to get a contract drawn up, you'll be in a better position to describe exactly what you want.

[spiff]

bad idea! never get into business with friends or family!

[Maelly]

Thanks to all comments, for and against. One thing which comes out clear here is having a clear and water-tight legal contract. Which we intend to do, we have already discussed some stuff we want in there. We also have life policies and the guys work work in government (except for me - Pvt). These are also male friends (the business with pleasure thing)... again, thanks for comments:)

[ice_cubes]

remember, if one of your friends gets married/divorced/deceased..any property under their name will be affected...so i would firstly suggest u either open a CC, trust or company...trust being the most preferable option!
Marriage: u will all end up with a new (unwelcome) partner
Divorce: your friend's share will also fall under the divorce settlement & u will find yourselves having 2 part with valuable property or again be stuck with an unwanted partner
Death: your friend's share of the property will fall into their estate....estate tax & CGT consequences..this can be very costly & detrimental 2 the whose "brilliant" idea!