Join Australia's most dynamic and respected property investment community

Buying an apartment with my dad

Discussion in 'Property Finance' started by brettosm, 26th Apr, 2016.

  1. brettosm

    brettosm Member

    Joined:
    22nd Apr, 2016
    Posts:
    8
    Location:
    Melbourne
    Hi folks!

    I used to enjoy reading the somersoft forums back in the day :)

    Can anyone please suggest how I should approach this situation?

    My dad is 60 and needs a place of his own.
    If I help him buy a place he has a lot more options and I will inherit the property one day.
    We are looking at buying an appartment for about $300k.
    He would pay cash for half of it, and I'd get a loan for the rest.
    He'd live in the apartment rent free, so I'd not be getting any income to service the loan, but I'd be getting an apartment for half price!

    Should I just get a variable rate loan and make sure I can afford it, or is there more to it?
     
  2. York

    York Finance Broker Business Member

    Joined:
    24th Jun, 2015
    Posts:
    1,621
    Location:
    Sydney
    There are a few questions to ask yourself in my opinion.
    1. Can you afford the repayments without the rent? Does the bank think you can service the loan without rent? (based on their calculators).
    2. Will the property be in both names or just yours?
    3. How will this move affect your future plans? That is - do you/will you want your own property in the future? If so, you need to think about how this will affect that. Will you able to service both properties?
    4. In the event that you have a falling out with him, what will happen to the property?
    5. Do you have any other siblings that may get involved later on to claim a piece of the pie? (assuming it's in both names).

    Most of the time buying property with family can be the wrong move. I understand that this may be a sensitive situation and you're trying to help him. But I think you should get proper advice from a legal professional and a broker to have a crystal clear idea of what's involved so it runs as smoothly as possible and there are no issues which might arise later on.

    Just a few things to think about.
     
  3. Biz

    Biz Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,474
    Location:
    Sydney
    What if he gets a younger woman pregnant with a new heir and you stuff up somewhere along the line? THEN WHAT??
     
    Terry_w likes this.
  4. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,392
    Location:
    Sydney
    Or he dies
    Or you die
    Or you marry a grub who makes a family law claim

    Get legal advice to protect both of you
     
    Gingin and Terry_w like this.
  5. Marg4000

    Marg4000 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    925
    Location:
    Qld
    That sounds a bit harsh.
    Marg
     
    Joynz likes this.
  6. Tranquilo

    Tranquilo Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    342
    Location:
    Mascot
    If your going to do it and can service.. I would take the 150 pay 20% deposit and legal cost, and offset the rest and put in your own name. Why in your name is because your going to have the mortgage and be responsible for the term of the loan.
     
  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,169
    Location:
    Gold Coast
    Lenders will probably give you grief

    not impossible thats for sure, but many lenders will refuse it

    ta

    rolf
     
  8. Tranquilo

    Tranquilo Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    342
    Location:
    Mascot
    Of course no rental income:)
     
  9. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,168
    Location:
    Adelaide, SA
    Any siblings? Or your dad might find a partner potentially?

    Fairly risky - it would be well worth looking at alternative options. Your father could potentially loan you the 50% portion, so you maintain 100% ownership and he retains his entitlement to the cash - but you'll still need to consider tax and pension treatment over the long term.
     
  10. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,006
    Location:
    Sydney
    Many ways to structure this
    Joint Tenants
    Tenants in Common
    Your name only
    his name only
    etc

    Which you choose will depend on the circumstances. Too many variables to consider. Having 2 people involved means that number of things that can go wrong are quadrupled!
     
  11. JDM

    JDM Well-Known Member

    Joined:
    19th Jan, 2016
    Posts:
    145
    Location:
    London (ex Brisbane)
    Asset in your name and then granting your father a life tenancy may be an option (this is obviously subject to legal advice for your individual situation - you may have better asset protection in your fathers name for example). Life tenancies are rare and often overlooked but may be appropriate in your situation.
     
  12. brettosm

    brettosm Member

    Joined:
    22nd Apr, 2016
    Posts:
    8
    Location:
    Melbourne
    Can someone please suggest a lawyer in Melbourne that could meet with my dad to explore this with?
     
  13. albanga

    albanga Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,116
    Location:
    Melbourne
    If they didn't need to be in Melbourne (not sure they would) @Terry_w if taking new clients would be my bet.
     
  14. brettosm

    brettosm Member

    Joined:
    22nd Apr, 2016
    Posts:
    8
    Location:
    Melbourne
    Does't look like we'll go ahead with this. My dad would much rather live somewhere where the population happens to be very low. Thanks for all your advice.
     
  15. Mumbai

    Mumbai Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    763
    Location:
    Sydney
    Poor Walda!
     
    Biz likes this.