New starter looking for advise

Discussion in 'Introductions' started by KnockKnock, 29th Oct, 2017.

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  1. KnockKnock

    KnockKnock Well-Known Member

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    Hello guys,

    Just joined a few moments ago to this forums but have been a reader since a while...
    A big thanks to all the posters who share their knowledge about property...

    My situation is that I am thinking of investing with my brother and sister...None of us has a property yet...
    Option 1:-
    I earn 80k same as my sister but my brother earns around 105k...
    All three of us living in different cities due to work i.e Melbourne,Brisbane and Cairns and paying rent...
    I want to pitch in an idea of buying something together either in Melbourne or Brissy so that atleast one of us can live in it paying rent of course and all three can chip in to pay of the debt overtime...
    I know that partnerships are complex and will need a good investing team to help out with proportions,structure,taxation etc and what if things go wrong scenario arrangements...
    Depending on our pay grades do you think this is a good idea?

    Option 2 :-
    Is it better for me to go solo on a property in Brisbane and ask them to park their savings in my mortgage offset accounts and I pay them 3% interests which they get from their bank anyways...

    Option 2 seems less complex but I kind of have no savings as I had to pay of a massive debt recently but glad its over...
    I am 25 and I really want to get 2-3 good performing investment properties and 1 PPOR by retirement so that I wouldn't have to rely on pension...And if possible retire earlier...

    Please advise.
     
  2. Ace in the Hole

    Ace in the Hole Well-Known Member

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    Option 3.
    Never mix business with family or friends.
    There is an extremely high chance you’ll regret it if you do.
     
    Colin Rice, Tom Rivera and hobartchic like this.
  3. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    @KnockKnock

    If you choose to buy together, you will pay the price long term, and this may set you back many years.

    Buying and borrowing together means joint and several liability. In future, if either of you choose to expand your portfolio or buy an owner occupier property, 100% of this loan will be taken into account as your liability and only 1/3rd rental income will be attributed to you by the lenders. There are a handful of lenders who may only take 1/3rd of the liability.

    Ideally, you should save up a deposit and then purchase.

    Your siblings could choose to buy in their own name, unless all they wish to do is get a 3% return. Just depends on their goals!
     
  4. Trainee

    Trainee Well-Known Member

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    You should invest separately. You make enough to save and invest on your own.
     
  5. Air_Bender

    Air_Bender Well-Known Member

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    Welcome to the forum KnockKnock.

    I'm no property guru but I would go it alone if I were you. You and your siblings all make a decent buck and I believe in the long run you will all appreciate putting in the hard yards now so you can look back at all your achievements.

    Saving isn't always easy but there are a few things you can do to build up a decent deposit faster. Spend less than you earn, make your own meals at home, find a cheaper place to rent or perhaps move back home for a while, catch public transport instead of driving etc.

    Investing with family or friends can be risky as you never know if and when the other parties' goals will change. Each to their own but I personally wouldn't get into such an arrangement.

    Good luck.
     
  6. Trainee

    Trainee Well-Known Member

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    Just noticed you have no savings. You are in no position to buy a property. Your siblings should not trust you to buy a place together. What are you contributing?
     
  7. KnockKnock

    KnockKnock Well-Known Member

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    For starters I would say they would get a rent paying tenant thats around 1200$/month staying in the family rather than paying an outsider...
    Secondly, if interest rates rise down the line then the combined cashflow would help reduce the amount of interest paid to the bank...
    Solid point.

    I do understand money and family can get complicated and sometimes dirty but I am just thinking of options to get into the market soon to use the compounding...
     
  8. Trainee

    Trainee Well-Known Member

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    Why is your money different from anyone elses? Better if they got their 1200 per month from someone else and you rented for less than that. Net more money in the family.

    Your not contributing savings and you arent paying above market rent. Your siblings will be helping you.

    The other thing is are your siblings even interested in property investment? If so why wouldnt they do it themselves?
     
  9. jaybean

    jaybean Well-Known Member

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    Depends on the family. Been investing with my brother for over 10 years, has gone smoothly.

    It works when:

    A) Both have similar thought processes and similar levels of financial knowledge (e.g. I don't need to go to great lengths to explain why we're going with lender A instead of B, even though A has higher interest rates but better XYZ), and;

    B) Both are able to focus on the big picture. Need a 1k repair? Meh, get it done, let's not even waste time on a phone call. One of us wants to install a new X or Y? Whatever, won't even blink an eye. If you have people who are obsessed about the small details and constantly questioning every single minor thing won't last long. I've seen it before...cheapo's who struggle to see the big picture: smoke alarm bill for $50???? Why didn't you shop around???? For me, I don't give a crap. If the property is going up 50-100k a year, I'm not going to lose even one minute of sleep over a few bucks. This is how we make our partnership work. If you can't see the big picture, don't even bother. I've seen many people like this and I just shake my head. You'll be arguing over stupid petty crap all the time.
     
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  10. hobartchic

    hobartchic Well-Known Member

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    At 25 you are doing well to have a decent wage. Time to knuckle down and save some money and buy a place on your own when you can.
     
    Tom Rivera likes this.
  11. Tom Rivera

    Tom Rivera Property Manager Business Member

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    Welcome mate! Some very valid points here, but only you know the relationship you have with your family. I wouldn't buy with either of my parents if my life depended on it, but I'd buy with my sister.

    That said, I think you'll find when you put together a long term plan that you're going to be better off purchasing separately and combining your knowledge to grow off each other in that way.
     
  12. Beano

    Beano Well-Known Member

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    You really need to look at the deal ..if the deal is too large for one person then joint may mean you can "do the deal"
    I was told by the real estate agent to try and get out of the "mums and dads" market as they are too hotly contested hence the yields are lower
    You can always buy out the others later
     
  13. hammer

    hammer Well-Known Member

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    Which city are you in? If it's brissie or Cairns you can buy something EASY (ish) on an 80k wage.

    Keep reading this forum and get cracking!

    Don't mix money and family....I've done it and it didn't end well....
     
  14. Colin Rice

    Colin Rice Mortgage Broker Business Member

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    This ^^^^^
     
  15. KateAshmor

    KateAshmor Victorian Conveyancing Lawyer Business Member

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