Co-ownership property investment
What is co-ownership?
Co-ownership is a way of sharing the ownership of a property between two-or more people – friends, family members or partners. It usually involves the incorporation of a company.
For investors, it involves:
- Pooling your money with others to put down a deposit on a home
- Combining your credits to get a property loan
- Getting a rental income
- Flexibility to sell out your share of the property if you want to
Sharing the ownership has many advantages. You can lower your cost and pay off the loan faster or lower the interest to earn a higher yield.
However co-ownership has a number of tricky issues, so its important that you have a legal advisor to draft up the co-ownership agreement.
In the agreement, it should clearly states:
- The intention of the investment
- Who should manage the investment (do you appoint a external agent to manage?)
- How do you decide on rental yield
- What is the exit strategy
- What happens when there is a default
- What happens when one investor wants to sell his share
Its important to discuss all the issues and have it legally documented. This will ensure there is no legal hassles down the track.