No matter how close you are to your parents, siblings or cousins and how well you get along, when you throw money and property into the mix, it can sometimes be a recipe for disaster. But that does not mean that buying with family should never be considered.
The fact is, there are some very attractive reasons for buying property with family, the most obvious being affordability.
By pooling your resources, you have the opportunity to either:
• Enter the property market for the first time when you couldn’t do it on your own, OR
• Invest in a better property in a better location and save on the ongoing costs of owning a property.
You just have to know the risks associated with buying property with family and how to avoid them. There are also some key considerations you need to know about.
The risks and how to avoid them
Look at your family objectively and ask the following questions (then discuss these concerns openly and honestly with each party):
1. Is there agreement amongst the members who want in on the purchase about the type of property and the budget involved in the purchase?
2. How will the family deal with the management of an investment property or a permanent place of residence?
3. If it is to be a permanent place of residence, how will the living arrangements work?
4. How open are the lines of communication? Open communication is key to successfully buying property with family.
The key considerations
1. Type of loan – Property Share Loan or Family Trust?
2. Management of the property – who will act as project manager of the investment?
3. The legal stuff – an official co-ownership agreement is a must.
4. Differing opinions – there are a number of things all parties must come to an agreement on if the shared investment is going to be successful.
Click here for the detail related to each of the above key considerations.