Buying IP outright, rental yield / capital

Hi, so i have been researching quite a bit regarding real estate the past 6 months, my situation is as follows;

me and my sibling are wanting to buy a IP to buy and rent out whilst we live at home and thereafter, we have enough funds to purchase a IP ranging 400-500k out right with no loan. As i know capital growth is king in real estate however as it is mutually owned a cash flow passive income is our goal, i have looked at outer suburbs from major cities (brisbane, melbourne in particular) for low cost high return yields, also looked at UniLodge which seems like a good bet however selling it when the time comes i feel would be an issue and then we have DHA however i dislike their high maintenance fees and overpriced houses/units, another thing that comes to mind is apartments in major cities, typically 2 bedrooms, melb, brisbane and adelaide.

My question for you astute investors is, given my circumstances and so to speak "goals" which avenue would be best? i want to eventually build a portfolio of cash flow properties and capital growth properties but given the highly inflated prices of houses and such right now i dont think is best to chase capital growth.

My expenses is near nil and i am 23 years of age.

 

Dont buy together.
Dont buy together.
Really. Dont buy together.

 

if its for a purely passive income standpoint, why not?

 

Your 23. Whats going to happen in the future? One of you gets married, wants to start a business, partner doesnt like the property, whatever? Dont give me that were siblings and well always agree thing. Your way too young to focus on passive income in such an inflexible investment. 'Plan with the goal in mind' doesnt mean what you think it means.

Again, your 23. You have a decent block of cash. Learn how to do it wisely. Put the money away for 6-12 months. Read everything on this site first.

 

Joint ownership can be a nightmare especially with family. Way too many variables that can go wrong with any partner.

Also if you were going ahead with the idea there are better ways to structure it. I'd get a loan at 80LVR and have a offset with the remaining funds in there. Will allow a lot more room to invest in the future and if anything goes pear shaped the funds are there.

 

Like it's already been said, don't do it. Read as much as possible on this site first. Maybe something like this to get you thinking - 10 IPs by 25 - My Investing Journey

 

If you can afford it without them then go for it otherwise wait until you can do it alone.

Not worth the headache/risks buying with a few siblings.

 

If you can afford to pay cash for something $400-500k together, you can certainly afford to pay the same amount with a modest loan individually. Like everyone else has said DON'T DO IT!

 

Pretty well all my investment properties have been joint (in the first few years)
Formed about 6 different partnership
All bar one were ok
With my siblings it was ok and I still have one prooerty in partnership with them
Managed to buy a property every 6mths with this method in my younger day's
But nowadays I do them all myself
You really need to have the same aims
Ps the one that did not work out the partner stole part of the rent

 

Nothing wrong with joint ownership as long as you know the risks and issues. You should seek legal advice generally and on the ownership structure in particular.

An alternative may be to use a company to own with each of you owning the shares or a separate trust each owning the shares. You can then lend the company 100% purchase price to buy.

Benefits are
fully borrowed
Money available for a main residence in future
No stamp duty if one wants out
No cgt if one wants out

Etc

Some downsides too

 

I would not do it joint unless with a spouse or unless your happy to completely carry the other party should they wish to or get in a position where they no longer pay for anything and you accept that if they have some legal issue, place could be sold on you....etc etc

 

I know of siblings taking each other to court because of this. Don't give yourself and your parents heartache

 

i know of siblings who have done this and continue to own properties jointly without any problems.

 

This is not investment advice, but as I understand it $ for $, shares beat property. The benefit of property is leverage - going all in with no loan would seem to go against the main benefit of real estate.