buying a property with my friend's son as tenants in common

Discussion in 'Accounting & Tax' started by megh, 17th Aug, 2021.

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  1. megh

    megh Member

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    I want to buy a house as investment subdivisable land with tenants in common with another person( my friend son) who is 18 years . I have high income and my friends son don't have any income I am hopefull that i will get a loan . I have high serviceability and my friends son will put the 20% deposit and expenses. We have a good understanding . will we be having issues in getting a loan as the other is 18 years or any issues people would advice to me.
     
  2. Colin Rice

    Colin Rice Mortgage Broker Business Member

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    This will be an issue with mainstream, second and third-tier lenders, private funders will consider it and will require an exit strategy within 18 months.

    If you have a high income then consider a personal loan to raise the deposit or get a legally documented loan off the friend's son or a combo of the two depending on the numbers involved
     
  3. Ross Forrester

    Ross Forrester Well-Known Member

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    Get a good agreement drafted between yourself and your friends son. Basically you should workshop how you want to deal with difficult scenarios and then write that down and get the document professionally prepared. The hard work is getting the discussion on how to deal with stuff if it goes bad.
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    18 year olds tend not to be stable, think of the worst that can happen and hope for the best.
    If can work out though.
    Another option might be a company as owner.
     
  5. wylie

    wylie Moderator Staff Member

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    Why are you wanting to do this rather than do it on your own?
     
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  6. megh

    megh Member

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    If we set up a company does it works can we get a loan as its a new company
     
  7. megh

    megh Member

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    helping their family
     
    Last edited by a moderator: 17th Aug, 2021
  8. megh

    megh Member

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    If we set up a company does it works can we get a loan as its a new company
     
  9. megh

    megh Member

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    can you help with the agreement
     
  10. wylie

    wylie Moderator Staff Member

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    Can you help their family by having your friend join with you, rather than the 18 year old son. It sounds like it could become tricky.
     
  11. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Company can borrow money to buy property too.
     
  12. Clean Cookie

    Clean Cookie Well-Known Member

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    I think a structure would be your best bet as above.
     
  13. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    The advantage of a company is if one wants out the other can buy the shares without the need to change the title of the property. This could be done without stamp duty in some states too.
     
  14. Mike A

    Mike A Well-Known Member

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    only a lawyer can help with the agreement
     
  15. Mike A

    Mike A Well-Known Member

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    @Terry_w what about a unit trust ? or getting a loan a bigger issue ?
     
  16. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    That could be equally good or even better in some cases. Loans prob slightly hard to get than a company, but not by much.
     
  17. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Lenders will generally consider the Directors and shareholders of the company and may have issues with a young borrower as they must provide a guarantee. The loan guarantee is joint and several and a lender may not be eager. If they have no income its likely to be refused. The manner of what % interest each has and many many other factors would be wise to seek legal and tax advice on.

    A company doesnt provide a shareholder with a right to a share of profit contrary to common belief. A shareholder cant sue the company if its doesnt share the profit.
     
  18. Ross Forrester

    Ross Forrester Well-Known Member

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    I sent you a private message.
     
  19. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    If a lender is going to lend to a young person as a borrower, they are likely to lend to a company of which the young person is a director and shareholder of.