15 Jun Buying Investment Property with Family
What do you need to consider when investing with family?
Whether you are borrowing or partnering with family and friends for an investment, it is important to ensure everyone is on the same page and all steps are completed correctly and thoroughly. There are many benefits to investing with family, but there are some factors to consider that you may forget when dealing with family and friends.
- They trust you and like you. This may sound simple but it’s one hurdle you will not have to jump over, and it makes the entire experience much simpler.
- They care about your success, and this can make it easier to pitch the idea to them and gain their support.
- Family can be more likely to be flexible about the terms of the partnership, which can mean longer repayment periods and interest-free or low-rate loans.
- They already know you so no need for a detailed partnership plan. While it is always important to be detailed and thorough, family members are likely to already know a lot of the information, so this makes the process more efficient.
- Share the gift of wealth with people you care about. The only thing better than making money for yourself is making money for the people you care about, and a shared investment is an easy way to accomplish this.
Things to Remember:
- Paperwork! Just because you are working with family or friends does not mean you should be complacent or cut corners. Ensuring there is a formal written agreement in place that spells out shares and profits and clarifies financial liabilities is necessary to ensure you are forming a responsible partnership.
- Explain everything so they understand. Pitch professionally and clearly; it is not ok for a lending party to not know what they are getting into.
- Make sure they feel that they can say no. Do not give them the hard sell, give them time to consider their options, and give them room to say no.
- Only take money from those who can afford it otherwise you could risk losing more than money, you could lose relationships.
- Make your expectations clear so everyone knows what to expect from the partnership.
- Lastly, remember to think twice about approaching family if other sources of finance have turned you down, and be honest about being turned down to family and friends, including telling them the reasons why.
Investing and partnering with family can sound like the dream but done incorrectly and without the proper checks, it can also cause more harm than just losing money. At Concept Capital Group, we have experience with family partnerships and have many families who have chosen to purchase a home with us. Our expert sales team talk families through the process and ensure everyone is well informed and everyone’s questions are answered. Call us today on 0208 138 1888 to find out more or email [email protected] to book a phone call with our team.