Whether you’re shacking up or taking the plunge into a new venture with a partner, friend or family member, you need to weigh up the pros and cons to stop you losing thousands, even more, if things go sour. Read up on the best tips to survive investing, because no one likes an awkward family reunion…
by Anna McDougall, Money Maven
The only thing worse then a close friend letting you down – is you dropping the debt bomb on them. To make sure you won’t be on the receiving end of a furrowed brow and pointed finger, ask yourself; are you in good shape to run a business or to buy your share in a house? If you doubt your ability to take the strain, call in the professionals.
On the personality side of things – your opposite personalities could be the thing that brings you together, or your downfall. Watch out for tell-tale signs of conflict before it happens. For example, phrases like “that’s unfair!”, when complaining getting on your nerves, decisions made where you haven’t been involved and when they’re suddenly MIA for a few days.
If it’s family conflict you’re worried about, nip it in the bud or steer clear. For example; headstrong dads, spoilt children, fighting siblings and family cliques will be trouble from the start.
Tips for Getting Started:
– Discuss and identify how you will share costs
– Address key questions regarding the property or the business in advance. e.g.
Are you going to live with your partner/friend in this property?
If you’re going to rent it out, how will you be splitting the earnings?
What is the ownership split of costs for the repayment based on the loan term?
– Decide who owns what percentage of the property or business.
– Put Together an Agreement
Describe who does what,
How much of the business/ property each person owns
What happens if someone wants to leave the business/ property
You need to know all this before you make any final decisions. Be sure to also factor in costs such as stamp duty, taxes, bills and renovations.
Have an exit strategy
Think of the worst-case scenario and all of the possible outcomes such as:
a) What if one of you dies or faces a serious illness or disability?
b) A change of employment and income?
c) Bankruptcy or changes in the market?
d) You leave your partner / the friendship ends?
e) Selling the property at a loss (after fees and charges)?
Jeremy Cabral of homeloanfinder.com.au warns when it comes to property, “It is vital to take the time to research and plan the purchase of a property with someone else. There are grave repercussions if the agreement is entered into lightly and things don’t work out as planned. It’s often difficult to imagine a friendship or relationship breaking up, but this can and does happen so take into account every situation and plan accordingly for each to preserve your investment.”
Finally, remember, business is business.
