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.

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