Buying through joint ventures
Experts say owning 50% of something is better than 100% of nothing.
However, you will need to make sure you have a co-ownership agreement drawn up in order to avoid disputes between co-owners.
The agreement doesn't have to be complex, but it will require you to have rules and agreements worked out in advance this is crucial.
Things to be considered include:
- Co-owners should set up a sinking fund to cover repairs and periods when the property is vacant
- Agreed time to hold the property
- A plan to pay for unforeseen maintenance costs
- How various insurance issues will be handled
- Taxation/depreciation, capital gains tax issues clarified
- On sale to another co-owner and determination of sale price
- Who determines the rent and the tenant
- Contribution of portion of price or deposit
- Which of the co-owners will live in the property and on what basis
- How sale proceeds will be distributed and why a sale would take place and how to resolve disputes
- A co-ownership Agreement should be arranged before purchasing and deciding which ownership structure Joint Tenants or Tenants in Common you will be taking.