Buying a property by yourself is ideal in terms of control and autonomy. However, this is not achievable for everyone, especially if you can only save a lower deposit, which can also prevent you from entering the market at a convenient time.
A real estate joint venture "can mean a larger joint deposit, which opens up purchasing possibilities," said Jason Paetow, managing director of AllianceCorp.
"Alternatively, one person may have the deposit but little borrowing capacity, while the other person has no deposit but a strong borrowing capacity, so the positions are complementary, "says Paetow.
"In the end, you are better off with half of a high-performing property than the whole of a property that offers no growth."
Paetow advises borrowers to be aware of the financial liabilities of a real estate company and its potential impact on your future borrowing, which he says can "prevent you from building an appropriate portfolio and 39; achieve your financial goals. "
Purchase in partnership
Regarding investors who connect to create wealth through property or execute development, whether they are friends, relatives, or even strangers, Paul Wilson of Income2Wealth says that he "saw very good results – and very bad results".
"Let's say we meet a guy who is doing 10 townhouse developments and looking for $ 1 million, and he wants investors to invest in his project. [This means] we rely on a person who owns the assets, who will do the construction; he will control the funds and he will give us a return for our funds at the end of the project. It is an unregulated environment and it presents a fairly high risk, "says Wilson.
As the real estate market evolves, so do resources that can guide investors on the safest path so that things don't turn from a dream to a nightmare. This is where joint venture and union platforms have filled the void, providing a more secure means by which investors can pool their resources for better financial gain.
"In the end, it is better with half of a very successful property than the whole of a property which offers no growth"
Recognizing the potential of joint ventures, Wilson launched an "Armchair Development" fund that allows investors to combine their capital with that of other investors in development projects. It is accompanied by increased security in the regulation of financial services, which minimizes risk. Last year, this fund paid its investors up to $ 3.3 million in monthly profit payments.
"This represented a 20% return on their invested capital," says Wilson. "This allows an investor to participate in projects that are too important for him to do himself … where the structures have been put in place to mitigate the risks while paying them a very good return."
How to buy in a joint venture
Ben Kingsley of Empower Wealth advises investors to create a legally binding buy-sell agreement, which will make sure each party knows the rules.
"What happens if a person wants to go out early?" I always say that the best way to make sure that both parties are very interested in embarking on this path is that if one party wants to get out within five years, it doesn't get no gain, it gets no return, so all of a sudden [they might think,] "Oh, it's serious now," says Kingsley.
"Because what we often see is too much conflict and no one earns money, because their life circumstances have changed, or their priorities and where they want to put their finances has exchange."
In addition to offering a fractional real estate investment platform, DomaCom has partnered with Domain to provide an online platform that allows investors to select a property from anywhere in the country and pool their financial resources to invest there.
Although loans have tightened and more borrowers are unable to obtain loan approval, Naoumidis says: "This is irrelevant in our case, because when you create a union in DomaCom, you click on a button to say: "I want leverage", and [say that you] want a maximum of 60%, it means that you only need to raise 40% from your friends and family. ยป
Find out more:
Inexpensive Ways to Take Advantage of the Property
The A-REIT path to real estate investment
Purchase of a "fraction" of a property
