Going into property with a friend

[FRASERRG]

Hi all,

My friend and I are looking to go into property sometime next year. We do not want to rush it in any way and are making sure we have a good amount of money.

We plan to buy and flip. Small renovation work and do 90% ourselves.

Does anyone have any need to know tips about going into property with a friend / in general.

Thanks all

 

[FWL]

Before you even start you will need a legal agreement covering the business relationship between the two of you. Please do not fall into the trap of commenting “oh, but we are friends” because it is very difficult to have friends in business.

 

[FRASERRG]

Before you even start you will need a legal agreement covering the business relationship between the two of you. Please do not fall into the trap of commenting “oh, but we are friends” because it is very difficult to have friends in business.

Hi,

Yep totally agree on this one, we will be doing this

 

[Longterminvestor]

If you are raising finance in joint names, how would this pan out if you were to go your separate ways and one person was to default on their share? In order to protect yourself and your assets would it be sensible to do everything in a company?

 

[FRASERRG]

If you are raising finance in joint names, how would this pan out if you were to go your separate ways and one person was to default on their share? In order to protect yourself and your assets would it be sensible to do everything in a company?

Hi,

You do have a point there, we are looking to setup a company after 2 successful renovations.

We plan on buying cheap, renovating cheap so it wouldnt be large mortgages.

 

[Longterminvestor]

Might there not be an issue with capital gains tax if you hold the first two properties outside of the company? I would presume a transfer of the assets into the company would be seen as a disposal for tax purposes by the taxman? However, maybe there would be a way to get around this by “loaning” the asset to the company in exchange for repayment of the value in the longer term? Just throwing some ideas out there.