What are the pros & cons of a property investment syndicate vs. just buying property by oneself? I recently had someone suggest forming a syndicate (just a simple group of 2 to 4 people) to buy real estate, renovate and hold for long term growth. If I have capacity to buy the property in my own right, is there an advantage to doing it via a syndicate with others? Is a synidcate only useful if don't have capacity to buy in own right? Other questions come to mind - how do we all access the equity when the property grows? If I organise it all, source the property etc. should I be entitled to some management fee? What would be reasonable? Any thoughts on +/- of this type of simple syndicate would be much appreciated.
Hi Ilori Doing a JV with other people can be beneficial or it can be a disaster, based on the stories I've heard. It requires much planning, documenting of common goals/purposes and procedures as well as consideration for getting something formal drawn up in the way of an agreement by a solicitor. Be aware that finance can be tricky, as joint and several liability issues are real and can impinge on your future serviceability. I have considered going down this path a few times now and I think you'll find this thread on the topic useful. Good luck in moving forward http://www.invested.com.au/6/buying-real-estate-others-713/?highlight=joint+liability
Thankyou very much for the link Jacque - I didn't realise lenders would take whole syndicate loan into account when assessing my personal serviceablity. I suppose the point of syndicate would be to get into investments that could not as an individual (whether it's lack of money, skills, time etc.). If able to do it by self maybe that's the better way to go. Maybe the general approach should be to buy all can as an individual, then when reaching limit of capacity, consider syndicate to buy a percentage of something more? Thanks again for you help
Maybe you can pool your eforts to research areas but buy seperately. Jaques points are very valid, others include trying to reach agreement on different points, what to buy, when to sell, how to resolve problems etc I wouldn't do this. If you do want access to something larger then join a property trust!
I got asked by a friend on a similar proposal and although everything looked appealing, I decided not to join in purely because I've always been raised to be careful mixing money and friendships. Anyhow, the pact fell apart before anything eventuated due to arguments on responsibilities. I just say if you are going to go ahead make sure everything's laid out at the outset good luck
