WNA Blog



Fri 18 Sep 2020

Build Your Property Portfolio Faster — Buy With a Buddy

Finance & Insurance
Building a property investment portfolio is a dream for so many women seeking to achieve financial independence.

However, the sizeable deposit required and securing finance often creates a stumbling block.

How do you overcome these challenges by thinking outside of the box and considering property co-ownership?

They say, two heads are better than one.


Have you considered pooling your resources to buy an investment property with a friend, business colleague or family member? Or maybe you have, but you’ve held back because you feared entangling yourself in a loan with someone else and what that might mean to your credit rating and financial status if it all went wrong. 

Well, hold back no more, as there are lenders in the market today who allow two borrowers to buy the one investment property utilising separate loans. And the good news is – each borrower is separately responsible for their own loan. 

These types of loans offer women who want to grow their investment portfolio the option to buddy up for success, by allowing them to split the cost of buying an investment property with someone else, while retaining individual control of their finances. 

Consider the Benefits: 

  • Pooling money could allow you to expand your property portfolio faster. 
  • Allows you to borrow more funds than you could otherwise afford on your own. 
  • You might be able to buy the property you want, in the location you want, rather than having to settle for a cheaper option. 
  • Your credit rating is not affected by the actions of your co-owner. 
  • Each borrower can decide on how they want to manage their own loan repayments. 

Naturally, as standard practice, each borrower needs to show they can service the loan they are taking out, but this type of loan is certainly a great option. For example, say one borrower has a sizeable deposit and the other lacks deposit but has good serviceability. In this situation buying with a buddy could be a win-win for both parties. 

However, in saying that there are things to be considered.  

  • You should always buy with like-minded person, someone with similar goals to yourself 
  • You need to make sure you feel confident that the other partner is financially secure enough to make their loan repayments.  
  • With co-ownership it is also imperative that each party seeks out independent financial advice and a co-ownership agreement is in place before buying a property. 
  • If it all goes wrong things can quickly turn into a nightmare, so it is important to protect your position. It is recommended that you speak to a solicitor and have an agreement drawn up that is specific to your needs and situation. 

The agreement doesn’t have to be complex, but it will require you to have rules and agreements worked out in advance – this is crucial. For example, co-owners may agree that if one wishes to sell, the other co-owners have first right of refusal to buy their share. 

Other matters to be considered might include: 

  • The contribution of deposit and the cost of the investment property? 
  • Should a sinking fund be set up to cover repairs? 
  • How long will the property be held before selling it. 
  • A plan to pay for unforeseen maintenance costs. 
  • How various insurance issues will be managed? 
  • Taxation/depreciation and capital gains tax issues clarified 
  • On the sale to another co-owner, how will the sale price be determined? 
  • Who determines the rent payable and the tenant? 
  • Will either of the co-owners live in the property and on what basis? 
  • How sale proceeds will be distributed and why a sale would take place? 
  • How will disputes between owners be resolved? 

Reviewing this list gives you some idea the way you can avoid any disputes down the track. If you would like to discuss the right loan for your buddy buying journey or revise any of your existing investment loans just call Tracy. 

There is no doubt that when it comes to investing in property, knowledge is power Avoiding the common mistakes made by others will ensure you build a successful property portfolio. 

General Advice Warning: This blog is not designed to replace professional advice. It has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the advice, in light of your own objectives, financial situation or needs before making any decision as to whether this scheme is appropriate for you. 

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