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Property Co-Ownership Investor and Acquisition Investment Tax Specialists TLK Partners Sydney
Choosing the Right Co-Owner for an Investment Property
A co-ownership approach to buying a property is becoming increasingly popular, especially among younger Australians unable to find enough capital to make the leap into investment property alone. However, Matthew Mousa, from financial planning and acquisition firm TLK Partners in New South Wales has warned that as much care must go into choosing the right co-owner as goes into choosing the property in the first place.
Shared ownership is common (and often successful) between spouses intent on ensuring they have a roof over their heads for life. However, it’s a different scenario in the investment world, Mousa says. The house is not a home, but an investment instrument that’s all about the long-term ROI envisaged in the form of capital gains, and the steady rental income it can bring in immediately. Against this backdrop, the end goal can become scrambled and distorted if partners’ aims diverge and there is no longer a single focal point.
The Role Co-Ownerships Can and Should Play
“The idea of co-ownership is very tempting because of its benefits,” Mousa says. “Pooled resources can provide a bigger deposit and cover entry costs like stamp duty and legal fees on more valuable property, in a better location. They can also increase the chance of landing a mortgage and sometimes a higher one. And the partnership can also provide a sense of security in the face of this long-term investment.”
However, he added that co-ownership goes way beyond two signatures on the property purchase agreement, and sharing the original purchase price. It ties the co-owners together for the life of the investment and binds them to the work involved and expenditure in making the investment succeed. And should the partnership break down the results could be disastrous, ending in stress, losses, and even in legal conflict. But, Mousa says, that’s most likely to happen when one or both owners didn’t realise what they were letting themselves in for and did not see buying the property as investing in a business.
Looking for the Right Partner
At the core of finding the right co-owner is to establish that the initial financial commitment with regard to buying the property will be met. But it is also important to know that the financial backing will continue in the long-term. But, according to Mousa, while financial considerations can be investigated with credit checks and financial records, there are other less tangible factors that need to be considered.
For a good fit, investment property co-owners should share the same goals for the investment and be on the same page when it comes to understanding that their commitment includes a long-term business involvement in order for the investment to succeed. This indicates that business acumen, skills and strengths, as well as reputation, and reliability should be taken into account along with financial stability when choosing a co-owner.
Mousa says that a partner should also add a new set of skills and strengths to complement those already in the business toolbox in order to create a broad, balanced and gapless business operation. And both partners should have similar work ethics and values enabling a fair split in the workload involved in keeping it operating.
TLK Partners Wealth Management Companies Kingsgrove, Beverly Hills | Tax Accountant & Agent | Property Advisers are financial management, retirement planning and wealth advisers serving enterprises and private individuals who hope to take care of their future through sound financial management. Visit their website or contact them at (02) 8090 4324 for an appointment to discuss your financial management and investment needs.
This material is of a general nature only, it does not take into consideration your financial circumstances, needs or objectives. Before making any decision based on this content, you should assess your own circumstances, seek professional advice or contact our office to be directed to the appropriate professional. Whilst all care has been taken in presenting the material neither TLK Partners or its associated entities guarantee that the material is free of error and, the information may have changed since being published.
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The information contained in this article is based on the authors’ opinion only and is of a general nature which is not indicative of future results or events and does not consider your personal situation or particular needs. Professional advice should always be sought relevant to your circumstances.
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