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nick b 94

Setting up a company with a family member

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Hello, I am looking at buying my first buy to let property and doing so using a private limited company. What would be the benefits of pairing up with a family member and going 50/50 on the deposit? Is this something that is done commonly?

Anyones help would be greatly appricated, many thanks Nick 

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Well it may add complexity and arguments, over direction and decisions. Which can complicate the relationship.

As you identify it can help with deposit. As well as other mortgage criteria perhaps such as minimum income, landlord experience and so-forth.


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Hi Nick

Just like with any joint venture, you still need to do your due diligence with family members. As Adam mentioned, do you have the same goals? What skills do you each bring to the company? What happens if there's a disagreement? With a non-family JV, you might be less emotionally tied which in turn might make decision making easier, but when it comes to family and money, this might be more difficult. 

So be sure to sit down with the family and document your plans, including any potential exit plans. 

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Hi Nick, 

I set a ltd company up with my brother and cousin a couple of years ago and we now have 4 properties now in it. 

It is very important to ensure your plans and goals are aligned as it’s no good to start a company finding that you have bought x number properties and the family member wants to get rid of them in 5/10 years when your plan/goal is based over 20 years. Obviously age may come in to this if investing with a different generation? You need to insure that you have an idea of your rolls and responsibility’s as this from experience can create problems further down the line. For example i would say that I undertake 65% of the work load maybe more, whilst my brother and cousin share the other 35%, but I knew it was going to be like this from the start so it was not a surprise. There are disadvantages and advantages but I would say in my case there are more advantages, for one we bought 3 properties last year and so far have another 2 going through the sales process this year so it has enabled us to buy more properties than I could of ever bought by myself and accelerate the process. 

 

Neil

 

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