Any success stories on here of 2 best mates going into partnership to create wealth in property. I have a best mate who I trust and teaming up with him would increase borrowing power a lot. I have a PPOR and he has no property's
Hi Bean Sounds high risk. Have seen it with clients with joint and several liability - invested with a (best) friend, and now our client wishes to build their own portfolio - to do this, they need to get rid of the property where they have a small ownership. Their friend has maxed their borrowing power as well - so cannot offload their share. I'd be careful mixing this with friendship.
hi @Bean27, going into partnership to increase borrowing is excellent, BUT you will need to consider the exist strategy, ie how long you plan to hold the properties in JV. ppl's circumstances change over time, need to think ahead what you and your partner do when such and such happen...
It can definitely work well depending on the strategy. If buy and hold then no chance. If your going to manufacture growth via Reno/subdivision/development then absolutely. That’s way each transaction has a 1-2 years life span.
... and people can change over time as well. I went in a partnership (business, not property) with two people. I knew one person, say A, very well (I believed we had similar values, ethics, ...), the other, say B, not quite so well (but A assured me that he was of the same ilk as us). After about two years, we started to become really dysfunctional, over all sorts of things such as strategy, financial status, ... A bit over a year later, I managed to get them to buy me out. Thirty months after I sold out, they went into liquidation and my partners lost everything. “Be very, very careful about who you jump into bed with” is my motto.
Not bad move if venturing into development project with intention of selling it after project is complete ... For vanilla buy and hold, steer clear I'll say..
I have experience in a JV for a development which is going well after 18 months, but we weren't friends beforehand, hence its a very focused partnership. I think what makes it work in this relatively equal JV is a similar level of experience, wanting the same outcome and open communication.
I have been in a Partnership business now for over 35 years. Granted, I have been extremely fortunate in the fact that both of us had similar desires all those years ago. Two young guys with big aspirations, little capital, but strong worth ethics...... and the key, genuine friends. Our families are close friends which also I believe has been a key ingredient to our success. We both simply wanted a future outside of Sydney and were prepared to do whatever it took to get "Established". It took years until we were kicking real goals. We kept our eye on the ball and through perseverance managed to make it a successful venture. I am selling my half of the partnership in August this year to my partners son. So happy to be doing this, for many reasons. Can it work for everyone? Not a chance. Every Friday we get together and thank our lucky stars for what has become not only a great business but a remarkable friendship. Does my partner invest in property? No. He only invests in other businesses...... and guess what he isn't short of a quid!
Similar story but ours was a partnership of 3 and their families over 25+ years. Built one company and bought another, picked up a 4th partner at this time. Sold the first company to the original employees and put everything into the seconded company. Developed the company until the older partners wanted out, (there was a 11 year age difference from the youngest to eldest) then sold out to a asx listed company. Like you though, it was a story of families not just partners.
