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Insert sister...

Discussion in 'Property Finance' started by JKWS, 22nd Feb, 2016.

  1. JKWS

    JKWS Well-Known Member

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    Time again for me to pick the brains of all the uber intelligent property peeps on PC!

    I'm a builder and my income is good, patchy but good. I've got equity and a few small unit developments under my belt. My borrowing is not bad, however still very restricted and I belive is going to be my next hurdle.

    My sister is, and has been on wages for the government in HR for years! She makes big money and pays big taxes. She however loves to spend and as a result of some bad credit card purchases has a terrible credit rating/ zero equity. She went to the banks 2 years ago and they wouldn't even lend her 25k..

    In order to help me and help her, I'd like to pair up on the next development. I'd be able to cover repayments and my sister would just come in on the title and mortgages to beef up the borrowing amount/ get her credit rating back on track from the younger years reckless spending.

    Is this theory logical? Or am I wishfully dreaming this up?

    We've downloaded her credit rating and I'm heading to the banks next week to suss out the theory. Though, it would be nice to have some PC input so I have some prior understanding of the situation.

    Any advice or obvious points, please feel free to share :)
     
  2. Xenia

    Xenia Adelaide Property Manager Business Member

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    Would she be able to increase the lending capacity?
    I would only do it if she can genuinely make a difference rather than a handout.

    Also ensure that she is not able to take off and sell property in future as an owner - or move in and decrease the rental income.

    I know we all trust our siblings, including me - but I have seen this happen before, hence the caution.
     
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  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Depends on what is wrong with her credit rating, but you could both be on title and on the loan. A better way may be to set up a trust or a company and do it through that as it will be more flexible.
     
  4. hammer

    hammer Well-Known Member

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    I've done stuff with family before and it was....er...difficult.

    If her credit situation is as you have described then you are dealing with a whole mindset that may not be "compatible" with your well-meaning plans....

    Does she have any savings? A plan? You guys might be inhabiting different planets. I'd be checking that the stars align before entering into any deal.
     
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  5. dabbler

    dabbler Well-Known Member

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    Sounds like a rope around your neck to me....be careful, especially with family, and if she cannot borrow the banks will look at it the same way I suspect.
     
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  6. JKWS

    JKWS Well-Known Member

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    Hmmm, this is all leaning towards the RUN FOR YOUR LIFE side of things.

    The only gain I would truly get, my hoping... Would be increased borrowing capacity. If this isn't likely due to her credit rating then perhaps I'll offer her another alternative.

    Maybe if she is serious she can show me, I'll ask for a savings plan to be adopted and hopefully towards the end of the year we can look at something together (her as a silent partner).

    As quoted above, we are from differnt planets haha


    Great feedback as always girls and guys, thankyou.
     
  7. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    What's the deal with the credit rating? Does she have defaults or just lots of enquiries?

    Cheers

    Jamie
     
  8. Joshwaaaa

    Joshwaaaa Well-Known Member

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    My other half has a couple of credit hits, as we found out it does not help beef up anything in fact it does quite the opposite. We have got 3 hits cleared this week so going to head back to the broker soon. We had to ring up creditors and tell them we would only pay them back if they remove the mark from her history or we wouldn't bother paying and got it all in writting. Seemed to work well enough
     
    JKWS likes this.
  9. JKWS

    JKWS Well-Known Member

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    Defaults and 2 checks :/
     
  10. albanga

    albanga Well-Known Member

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    Why not spend the next year increasing serviceability with projects within your serviceability means?
    By that I mean if your wanting to do a 4 townhouse development instead aim for 3, trying to do 3 aim for 2, trying to do 2 than how about a couple of subdivision/renovation projects?
     
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  11. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    There are commercial lending products which are a lot less restrictive in terms of borrowing capacity which may mean you can keep the sister out of it - well worth considering.

    Adding a person with poor conduct and defaults is not going to make your picture look much rosier in the eyes of the banks.
     
    JKWS likes this.
  12. JKWS

    JKWS Well-Known Member

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    Great advice, thanks guys.