Family buying entire block of units

A few family members and myself have been speaking about real estate investing together. We like the idea of buying an entire block of units together for most probably a long term hold. We are probably hoping to find a property inner/middle ring Brisbane.

What kind of structure would be most suitable for us? A family trust or a syndicate kind of thing?
Also, if anyone has any experience or advice about buying an entire block of units that would be great too!

 

Do your research on the figures. Multiple units often don't have the cash flow people expect.

 

I was looking at this recent sold place. https://www.realestate.com.au/sold/property-unitblock-qld-woolloongabba-137083610

As far as I could see, it would be pretty much neutral with a 35% deposit.

 

What's the strategy then?

Because I can sit here and do pretty much anything else with 35% of $1.7mil and do better than break even.

 

that is $595,000 tied up with no income.

 

And how attractive is cg when lvr is 65%?

 

And why would you need a specific structure to hold it? Advertisement says it's on 4 titles, so just buy one each if that's what you want to do, other than tying up your investments with other people.

 

that is still a specific structure.

 

Also this could have disastrous consequences. Any manner of things happens with one of the owners and they sell and suddenly the whole family doesn't own the block.

The whole point is controlling the block makes it more than the sum of its parts.

 

I thought you were looking to all move in as a family! Some friends are looking to do something similar so they can all retire together and share domestic help.

 

Our plan was to buy a block that can be renovated that is cashflow neutral. We have 1 investment property in Brisbane which has grown well. We may look to buy an additional house too. After the houses grow a bit more, we may sell them and pay off the apartment block within 5-10 years. Once paid off, we would all be debt free with the added serviceability we could invest further.

This is all with a super long term view as we'd love to set up future generations.
I've thought about the idea in theory, does anyone have any advice? I understand that people suggest investing separately but we are a very close family and love the idea of working on the project together.

 

You haven't considered the alternatives (you might have but not listed). Why does this sound better than each of you buying something separately?

 

The family that doesn't buy property together, stays together ...

 

One of our members is only 14 years old. We have inheritances that we are contributing to the deposit and my parents and I will cover the serviceability. The decision to pool together is an emotional one I concede. If we have clearly laid out exit strategies that suit everyone, what are some other negative implications?

 

you won't get a loan if a 14 year old is a part owner.
Lots of other issues which you should get legal advice on. It might be worth considering a company or a discretionary trust, or a combo, depending on the circumstances. (it might be best to avoid these too)

 

This can work well if done properly. You need a clear documented understanding of who is doing what, who is not doing stuff, and who is getting paid to do stuff.

Getting clarity on how the family will interact and deal with each other should be done before you talk structures and potential investments.

You will get conflict - that is healthy - how your deal with it is the difference.

 

Since there are quite a few of us, we have no problem chipping in for financial advisors, property agents, etc. I guess we feel that as a team we have alot of equity and serviceability and therefore
can buy better quality assets and have more flexibility in terms of strategy.

We are not at all dead set on this path with the full block of units. We like the idea of it being cashflow neutral so this seemed like a decent path. Do you guys think houses might be a better option? I guess the view to expand the portfolio is a priority.

 

Honestly, I think it's probably going to be a terrible idea. I obviously don't know you, your family or your financial situation - but generally speaking I can see about a thousand different pitfalls that could make something like this a practical and financial disaster.

Personally my general view on something like this would that youshould all take your individual cuts and run - or if you absolutely have to invest together, something boring like a unit trust that holds ETFs/high yielding shares.

 

Sorry I'm a bit of a novice. What kind of financial disaster could happen? Apart from potential opportunity cost, are there any other significant risks?

 

I'm no expert at all but have you considered some kind of commercial investment? I work for a very wealthy family that have now accumulated many commercial properties together.