5 tips for friendly co-ownership

With current rental prices at a fairly high level, the cost of renting a room or a small apartment could be similar to half of the repayment on a mortgage, making the idea of purchasing a tempting option for many Australians. Investors could also partner up with a fellow investor to purchase a share of an investment property.

Imagine only having to save half the deposit, pay half the mortgage and cover only half of the bills, and you’ll be building wealth at the same time. However, you should keep in mind the saying about mixing money and friendship. A partnership should be entered into with thorough consideration, full disclosure and careful planning.

1. Put it all in writing
This tip is at number one for a reason. It’s no big revelation that sometimes people disagree with each other, so to put less strain on the friendship it’s best if you prepare a co-ownership agreement outlining the responsibilities for each of you and the steps to follow through various stages of the investment. A solicitor can prepare this document for you.

2. Discuss all the costs
If you are taking on a big commitment with a friend it would be beneficial if your friend was fully aware of all the ongoing costs involved and reliable in making payments on time.

3. Set up the partnership wisely
It is worthwhile for each of you to get independent legal advice about the joint ownership. It is also important to discuss your plans with your accountant, mortgage broker and solicitor to ensure that all the documents, including the property title and the mortgage, are set up most appropriately for the partnership.  

4. Keep the sale in mind
Everyone buying property with a friend does so with the best intentions but situations can come up that require a new direction and either you or your friend may want to sell. Maybe one of you will want to live overseas, purchase another property with their new partner or experience a change in financial circumstances. It’s good for the friendship if the exit strategy has all been previously put in writing.

5. Protect the downside
If a responsibility is shared, both parties have to carry their weight but if one person becomes ill or gets injured and can’t earn an income, having adequate insurance can cover their share of the costs. A financial planner can take you through the options available to protect your shared asset.

About Jeremy Fisher
Director and Founder of 1st Street Home Loans, Jeremy Fisher, is one of the most awarded mortgage brokers in the industry and winner of the Australian Broker Association’s prestigious ‘Australian Broker of the Year’.

Since 2001, Jeremy has settled in excess of $500 million worth of property loans and delighted clients with exceptional results and highly personalised service.