Starting to Investing with family and friends

Discussion in 'Investment Strategy' started by AAA2214, 13th Jul, 2016.

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  1. Darren

    Darren Well-Known Member

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    Maybe would work if everyone invested individually but worked as an investment team to make better decisions.
    Would still have the same outcome just less complicated if things get ugly in 10 years time.
     
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  2. Phantom

    Phantom Well-Known Member

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    I also say don't do it.

    A close friend was involved in a partnership for longer than the 5 years you have been with your partners. It was all good until one partner got divorced. Then it went all went to the crap house. Partners turned on each other and it became a legal nightmare. Four sets of Lawyers involved sending letters to each other. It was a huge mess. Years of hard work can account for nothing.

    All it takes is one event to trigger it all. It's all good until it isn't.
     
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  3. Mumbai

    Mumbai Well-Known Member

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    ^^ that's correct :)
     
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  4. larrylarry

    larrylarry Well-Known Member

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    the general consensus is NO. so the OP has the answer. It's up to him to decide on the next step.
     
  5. 158

    158 Well-Known Member

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    There was a JV on here with 9 Directors.

    Crazy!

    pinkboy
     
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  6. Sackie

    Sackie Well-Known Member

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    Yeah hard to understand why would anyone put themselves in that position..
     
  7. hobo

    hobo Well-Known Member

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    Another "Don't Do It" answer here. $400k equity isn't enough to get a decent enough property to make the risk worthwhile.

    And btw, this is coming from someone who has done it, and would choose not to if at all possible, in the future.

    Are all four of you involved in (all of ?) the "small businesses" that you've invested in so far? ie are they all working in the business in some way? Or are you all hands-off, investors only?
     
  8. Foxdan

    Foxdan Well-Known Member

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    What's the point of pooling 4 incomes together to buy property? Just do it individually and save the hassles. Otherwise you will become linked to the serviceability of the others and investing may become out of your control.

    Rule number one for all joint ventures - agree on an exit strategy and how to value the venture for anyone who wants to exit the relationship in the future. Can't see how you can have an exit strategy in real estate investment if you have a long term view to gain profits.
     
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  9. AAA2214

    AAA2214 Well-Known Member

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    Got it guys. Looks like its a big no. I'll discuss this with my friends

    We are investors in the small business. We all have day jobs and no one works in the buisiness
     
  10. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Crazy but doable. They have purchased a site and on their way to DA in the coming months.

    Whilst more than 50% of the times investing with friends can end in disaster and you lose the friendship AND the money there are times when it works.

    Things to consider
    - how long everyone is happy to say goodbye to their money for
    - what happens when someone wants out (generally you find someone to come in for your share OR you say goodbye to your money)
    - how will everyone being Guarantors on the money affect everyone serviceability. THIS IS HUGE!! Everyone is generally 100% liable for the whole loan amount and it will suck the life out of your serviceability
    - death, divorce, disability and all of @Terry_w's favourite D words

    Once you've thought about that then consider
    - strategy (which is why you're here)
    - finance (not all banks like JVs)
    - structure (company, trust, directors)
    - tax - when you invest in property your other JV partner is the ATO - there is CGT, GST, Income tax, company tax to consider.
    - $$$$$ - after you split the profit 4 ways and pay tax is it even worth it??
     
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  11. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I say do it!

    But set it up so that you are not all tied into giving guarantees.

    This can be done many ways but one way may be to buy one property each with the deposit being borrowed from each other. A relatively simple structure cheap to set up.
     
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  12. bob shovel

    bob shovel Well-Known Member

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    I'm sensing negative vibes within the thread ...
    images.jpg
    Can the team get together with a "fancy business structure" and buy say a block of units, reno or extension or do some form of cg works then split the units into each name?

    By the sounds this isn't a jv of two people teaming up their "10k deposits" to buy a shanty, This is bigger business.
    What money does a 400k deposit get you with income of say 80k each (4×80=320k ;)) very basic but with business banking also they are going into a "gold coast high rise reno"! :D
     
  13. Barny

    Barny Well-Known Member

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    I have seen 3 people successfully invest together and pull it off in record time without an issue, 18 years ago.
    This was a family of 3, mother/daughter/brother. They bought one house in individual names, and all 3 combined all incomes regardless of being on different wages. They paid it off in record time, then bought the brother a house and again all paid this off and moved onto the daughters house. No contracts between parties, just an understanding.

    If you trust em go for it, I wouldn't trust anyone else holding up their agreement so I personally wouldn't as scenarios always change.
     
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  14. AAA2214

    AAA2214 Well-Known Member

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    Exactly what we were thinking on doing
     
  15. bob shovel

    bob shovel Well-Known Member

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    Ok. Now that you've agreed to use me as your advisor :D I'll just need some cash delivered and then a penthouse unit at completition ;)

    Unfortunately that's all i have :D But suggest looking at real estate.com for "unit blocks".
    What areas are you looking at? Is it to be hands on or purely investment and contract out the works?
     
  16. AAA2214

    AAA2214 Well-Known Member

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    Hehe, sure, if we can get there then why not :D

    We are in Sydney, so were thinking to start with something small in Sydney but its a peak market in Sydney so were thinking of Brisbane/Melbourne
     
  17. tangy

    tangy Well-Known Member

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    hi there, im curious as to the outcome of this thread. did you end up purchasing? hows that going?
    any conflicts?
     
  18. Mr. Wolf

    Mr. Wolf Member

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    First post since SS.

    Just Do it.

    I am in a JV with 7 of my colleagues. Still going strong.

    4 is a more manageable number.

    Get your legals and structure done properly - saves you headaches. Don't do it unless you have the long term in mind. Not had major issues - sometimes logistics but not unexpected. Engage professionals.

    Speak to Terry on structure.
     
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