Starting to Investing with family and friends

Hi Folks,

4 of us want to pool money and start investing. Here are the details

• All 4 are working 9 -5 jobs
• Good pay each earning 100k+
• 400k equity
• No prior experience
• Live in Sydney

Our goal is Capital gains and reinvest again for Capital gains

Are you able to suggest on the following

• What type of investment we can start with. Something small?
• What areas we can look at? Sydney or other cities?

Your help is appreciated

 

You posted the same question in another thread... my answer, don't pool your money. Dont buy in a group. And you'll get others saying the same...

 

Hi Gockie,

Got you. Everyone is on the same page. We agreed to set aside this money for investing.

 

Even still.... why not wait that bit longer and buy it yourself? The only joint purchase I have is with my partner and that's for the PPOR.

 

Classic scenario. Everyone starts kn same page with good intentions and goals, somewhere down the line something crops up and blame game starts...then up in tears. Even with a well drafted JV agreement does not guarantee things won't go sour.

That's what I see from time to time, not imagination.

Go into this with eyes wide open, literally.

 

No issues with the understanding folks. We been doing this in other small business together for years now.

Would appreciate if you can pitch in the ideas as if I had the Equity

 

Don't do it, someone's situation will change and initial good intentions don't guarantee anything. Think new partners, kids or loss of income.
Do it yourself and maintain control.

 

This must be one of the top 10 most asked questions. Usually its a terrible idea & of little gain vs buying solo as you're just going to all wreck your serviceability. Scenario where it isn't is if you are 4 tradies and are going to buy, reno and flip or develop. Even then though, odds are you're not making enough in deals to justify a 4 way profit split, unless you're just treating it as a bit of overtime.

 

I say you should do it. You will get some invaluable lessons out of it which you desperately need for even to be considering something like this.

There's difference between pooling money for a college trip and actually buying property.

 

You seem pretty confident with your mates so that's a start. As for other questions why to buy etc... Start researching. All of you have to do research on agreed areas and why. That might take a while.

 

Folks, I understand your concern and really appreciate your inputs. Joint venture ship is not good but we been doing this in other small business for 5 years and want to start investing here in Realestate.

 

Any inputs on the areas and what type of investment we can start? Buy a block and renovate and sell? Buy a block and build duplex and sell?

 

What small businesses are we talking about?

There's no quick money in property unlike small ventures or start ups. It's like getting married to an investment for long term before you reap the benefits. I can't see 4 people staying loyal to this one big marriage in the long term.

Plus the way you are trying to ignore to big elephant here, it makes me even more nervous about the prospects.

Anyways experiences do cost money and it will be a worthy experience in the end.

 

Maybe it is more useful if 4 of you come up with a plan for critique. Where, how much, borrowing capacity, timeframe and margins etc. @MTR @Leo2413 @Westminster @bedeveloper and others can comment on developments but it seems you haven't done any research to date. It's easy for someone to tell you invest in QLD Victoria or Western Australia but I don't think that's the right approach?

 

look for a subdivisible/developable land in Sydney and build duplexes. Easy peesy.
Or buy a block of units.

 

And that's when there are only 2 people involved.

But 4?

 

What if there are no buyers or price starts o go down a bit?
What if they are not able to estimate the costs?
What if they do not get profits of at least 20% out of it? Would it be worth it?
What if they have to hold for some time, may be a year or so? Would they be able to?
Who will pool in money then?
How long can you hold?
Have you developed before?
What experience you hae in renovating/ developing?
You reckon you would be able to do it in first go?

Regards

 

Double the fun.

 

I think @Mumbai is being facetious.

 

I think if one enters such agreement with eyes open and prepared for issues that arise then take a punt. Some issues cannot be resolved can delay the development and will be costly. That's a real risk.

Partner's fall out are played in court every other day and disputes on what was agreed earlier and later...dramas upon dramas.

If it's worth the risk and reward then do it but don't say no knew tells you about the traps.