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JV With Family


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Hi Guys,

 

Am pretty new to the hub and had a quick question with regards to JV's.

 

I do not tick many of the boxes to get a buy to let mortgage, being 20 years old, earning under 25K and not being a homeowner.

However, I am looking at the possibility of a JV with my mum as she does tick all of the boxes, I would most likely only have a 25%-33% stake if I did this however.

 

Firstly, I would be interested in opinions on a joint mortgages in this situation, would it be possible to get one, or would I present too much of a liability to get one approved?

I was also wondering if you guys thought that it would be worth it? The reason I am questioning this is that I could just save until I have enough to invest fully and get 100% of the rewards, but it is going to take me some time and as the podcast tells us (or at least new people like me), time in the market is more important than timing the market.

Any advice or help would be great.

 

Cheers,

 

 

Sam

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Hi Sam

 

I would avoid the joint mortgage option in the most part tbh...it creates a financial link visible on both credit reports and also limits your potential borrowing possibilities in the long-term if you intend to have a reasonable sized portfolio. The only real benefit to you is getting over the 'first-time landlord' hurdle but you can achieve that in different ways, or wait until you do tick more boxes yourself.

 

I would question the 25% to 33% stake idea, however. What would be the roles and responsibilities of each party in this arrangement? Will you source, project management or do lettings management? Will you be finding or creating opportunities with locked in equity or added value prospects over and above a regular property on Rightmove? Will you be shouldering a large element of risk or investing your time and knowledge to make the project a success? If you bring considerable value beyond access to lending then that is worth a reasonable recompense also.

 

Good luck

Best

Richard

Richard W J Brown a.k.a. The Property Voice

Property Investment Strategist

10%+ ROI property deals every week: check out PROPERTY DEAL TIPS
Amazon best-selling author Property Investor Toolkit & #PropTech, YPN Magazine columnist & PODCAST host

Web & Blog: The Property Voice | Curated property news & insights feed

Facebook Page | TwitterLinked In

Let's connect...mention The Property Hub :)

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Hi Richard,

 

I understand what you are saying about the joint mortgage, if it was possible for me to get a mortgage by myself, do you think this would be an idea worth considering? Of course it would mean a very different agreement between me and my mother.  Also, does doing this make it my investment with borrowed money?

 

The 25% to 33% stake was just based on capital investment, and I agree if we were to go ahead with this and I was to do all of the work with regards to it, then we would work something out that resembles a more equal partnership.

 

I am also interested into the idea of flips, not sure if you have any experience on the matter but my dad has some experience on renovation properties so could be a useful resource, I was wondering if it is a quickish way of increasing your capital with the future prospects of going into buy-to-lets?

 

Cheers,

 

 

Sam

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Hi Sam

 

It depends on the discussions you have had with your parents, but if they are happy to 'sponsor' you into becoming a property investor / developer, then it would certainly be worth considering even if it did mean diluting your returns a little. If you could get a mortgage and still make a decent return, then by al means go ahead with that route, as then you will have 'experience', which is a tick in the box for many lenders.

 

I have a fair amount of experience on the matter yes...flips can certainly be a good way to grow your investment funds. Of course, it all depends on the selling price being higher than all purchase, holding, selling, conversion costs, finance charges, fees and taxes...so they are not easy to find in other words.

 

Best

Richard

Richard W J Brown a.k.a. The Property Voice

Property Investment Strategist

10%+ ROI property deals every week: check out PROPERTY DEAL TIPS
Amazon best-selling author Property Investor Toolkit & #PropTech, YPN Magazine columnist & PODCAST host

Web & Blog: The Property Voice | Curated property news & insights feed

Facebook Page | TwitterLinked In

Let's connect...mention The Property Hub :)

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Hi Richard,

 

Thanks for the info, I haven't done nearly as much research on flips so I would need to look into that if it was the route I was planning on going down, was just interested if it was a way to grow capital with relative ease but it seems its probably not for me.

 

From your experience how does the repayments of a sponsor work? Or is it just they get a percent of all profits, being monthly and capital growth?

Sorry for all these questions, but worth picking your brains I think.

 

Cheers,

 

 

Sam

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Hi Sam

 

Brain-picking comes at a cost...a simple post like goes a long way my friend ;)

 

Sponsor repayment: whatever works really! Capital repayment by sale / refinance are the most obvious capital arrangements. Interest payment / rental profit split are the most common running costs splits. The splits and terms can vary depending on the circumstances and interests of the parties.

 

Best

Richard

Richard W J Brown a.k.a. The Property Voice

Property Investment Strategist

10%+ ROI property deals every week: check out PROPERTY DEAL TIPS
Amazon best-selling author Property Investor Toolkit & #PropTech, YPN Magazine columnist & PODCAST host

Web & Blog: The Property Voice | Curated property news & insights feed

Facebook Page | TwitterLinked In

Let's connect...mention The Property Hub :)

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Hey Richard,

 

Have spoken to my parents and they are very interested and I hope being able to show them this coming from someone more experienced will inspire some confidence into them.

 

Thanks for all the info, may get in contact again or post on here if I think of any more questions on the matter.

 

All your help has been great and good luck.

 

Sam

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