JV Partners

I read with interest a couple of threads about JV's in real estate investing. Most of them hinged on the fact that all parties would be jointly and severally liable for any mortgage against a property and the problems this would cause.

Has anyone had any experience in JV's with cashed up partners, so that there is no mortgage on the property so that it is positively geared?

 

Hi Anne(?),
No, but looked at something like it once and it didn't make much sense to do so. My focus was capital growth and using property's key benefit of leverage; so having everyone cashed up didn't work out as good as going alone with a smaller investment.

As a very simplistic example, if three people put in $100k and buy a property for $1M that increases in value to $1.6M for a sale, everyone gets back their $100k plus $200k - yeah! 200% (less CGT, sales expenses, etc). If you each have to put in $333K (as if I had that much!), you might get $200k but that's only a 60% gain (less CGT, etc). Alternatively 10 people with $100k get back $20k each . This all assumed rent and deductions = holding costs.

A better plan was something around to buy $400k that would gain around $240k in the same time (same growth rate).

Unless you're after very low risk (for a relatively low return), I can't see much benefit. All depends how far you want to stretch your money. Just ideas,

Dave