Thursday, March 12, 2009
Category:
Personal Finance Tips
With the cost of a mortgage, their limited availability, significant arrangement fees and the deposits needed, not to mention the cost of decorating, furnishing and maintaining a home, it seems common practice for individuals to invest with a partner.
Investing in property is one of the biggest investments and many are itching to get some of the property action. This is why partnering up with someone and investing in property together is on the increase. People realise that they may never be able to afford property of their own, so partnering up is the next best thing. Or is it?
There is nothing wrong with wanting to start sooner rather than later, but is buying property with a partner really such a good idea? And if you do choose to buy with a partner, do you opt for a stranger, a friend, family member or business partner?
Sure, you may think owning property with your sibling will be great fun, but think about it for one minute. Would it cause family problems, especially when it comes to money? Many people believe that making a joint purchase on property with a family member is a bad idea.
When considering buying property with a partner, take the following into account:
- What are your long/short term goals?
- How will you and your partner manage the property?
- How much money is going to be put in and is there a risk of losing any money?
- Will it cause any family conflict?
- What will happen if one person decides they want to sell?
- Will you live in the property together?
Remember, when family is involved, things get a bit tricky and personal. The last thing you need from a business deal is personal issues and problems. When relationships are involved as well, things can also become slightly tricky. If the relationship turns sour there can be a fine line between love and hate and it is worthwhile agreeing what would happen if you were to ever split up.
Also, consider the levels of risk in buying property. If the property is a land investment, there are some questions to ask, including how the profits will be divided. The more complicated buy to let investment raises questions on maintenance of the home, fair use of the property and rates. Your best option would be to invest with a business partner whom you know and trust.
If you are considering a joint partnership, speak to an advisor first. Buying into property is a big step, investment and commitment. You should make sure all your bases are covered, and you know all the facts beforehand. In the end you may have to live with the partner you choose, so make sure you get someone who could help you make your dreams come true.
