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Business Partners

Discussion in 'General Property Chat' started by Supportive Wife, 22nd Aug, 2016.

  1. Supportive Wife

    Supportive Wife New Member

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    Hi All

    My husband has spent many many many hours over the past 3+ years expanding his knowledge on investing in property and small developments. It's become abit of a passion and oneday would like property to become his main primary employment.

    He feels he is in a good place to start small by doing a splitter. His wage is decent and his borrowing capacity is fine but the wad of cash he has to put into it isn't enough to complete it from start to finish and so feels he would be best to go in as a partner with someone like minded.

    My first question I guess is to those who have went in with others to do a similar project - where did you meet your business partner?
     
  2. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Do you mean his deposit isn't enough?

    I would go see a broker and see what options there are for reducing the amount of cash needed to do it if he/you have been assuming that 20% is needed - sometimes on a simple project such as that it can be less.

    Partnering can double or triple the risk and shouldn't be entered into lightly. There is the legal issues, the finance issues (some banks will want both partners to be accountable for 100% of the debt), the structure issues and the accounting issues.
     
    Perthguy likes this.
  3. Supportive Wife

    Supportive Wife New Member

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    Yeah he only has $55K. He is aware of the legal and tax implications in partnering with others. (freaks me out abit but he is very determined) By the time he acquires the property he isn't going to be able to afford the $ involved in submitting the DA. But I don't like the idea of him having 100% of the debt but someone else has 50% ownership.
     
  4. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Do you guys have a PPOR or something you have equity available in to increase that amount to be able to do it yourselves? Or with a splitter in an area that is cheaper?
     
    Jess Peletier likes this.
  5. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    I would look at every option do complete it yourself first, especially if it's something you are intending to hold for any length of time.

    As Westminster suggested, getting equity from your home or another property could work, or lending from your parents via equity in their home, if they're willing to partner with you.

    If you plan to sell the lot, a partner can work but make sure the partner is also on the loan, not just your husband.
     
    Supportive Wife and Westminster like this.
  6. albanga

    albanga Well-Known Member

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    If your PPOR has a big backyard you don't want then start with that. Based on equity you might not even need to touch your 55k.
    If equity is an issue then subdivide first using the 55k get the new lots valued and pull the equity to construct.
    Away you go :)
     
    Westminster likes this.
  7. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Most banks rather than some ^^^^^

    I wise man said to me "never go into a business partnership unless you have no choice".

    Exhaust all other options as suggested above and then consider a partnership.
     
    Ted Varrick and Terry_w like this.
  8. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Best business partners in order....
    1. the bank
    2. ATO (the inevitable business partner for every deal)
    3. wife
    4. someone you have power of attorney over (;))
    5. a family member you never liked anyway


    Having said that I have 2 business partners. One I met on here so I'm not saying that it's impossible, but it has to be a VERY VERY VERY good match with a lot of trust, a lot of risk, and a lot of faith.
     
  9. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    @Westminster great perspective right there.

    It absolutley can work IF what you outlined transpires and I will no doubt be doing them in the future.

    A good JV is one that flows naturally with excitement rather than effort being the driving force.