return on investment property

rflook

Hi

I am interested in investing in a friend's property. They are looking to buy their first home and I am considering putting up 15% of the value. What I need to know before I do this is what sort of return can I legitimately expect on my investment? A matching percentage return upon future sale seems fair, but can I expect anything else e.g. a monthly payment. If a regular return on my investment is a reasonable expectation how should it be calculated.

The investment would be a one-off payment to help with the deposit and no further money is required for mortgage payments or bills etc.

Any help/advice is gratefully receieved.
Thank you.

Radiantsoul

How and when are you going to receive your money back?
If you are waiting for a future sale they might decide to wait until after you die.
And are they planning to get a mortgage for the rest of the money - the mortgage company will be interested that this is where there deposit is coming from.

I am not sure it is the type of investment I would be interested in. I think you would need a solicitor to draw up a contract.

clutton_2

if their lender is happy with a loan for their deposit i would just treat it as a loan, and as unrelated to the property market, agree a % interest repayment, and work out how many months they will need to repay it at an amount they can comfortably afford and get an agreement drawn up.....

getmore4less

Taking a share in a propert like this is going to get complicated.

If you want a % then what are you going to do about maintanence or capital improvements, if you don't contribute then you need to rework your % each time. if you do will you want to exercise any control will they want that

regular return could be the % equivilent of the full maket rent.

Exit plan? what if they get ito debt and th eplace is sold at a loss(it is not a one way bet)


Friends and money not normaly a good mix

ghostbusters

Radiantsoul wrote: »

How and when are you going to receive your money back?
If you are waiting for a future sale they might decide to wait until after you die.
And are they planning to get a mortgage for the rest of the money - the mortgage company will be interested that this is where there deposit is coming from.

I am not sure it is the type of investment I would be interested in. I think you would need a solicitor to draw up a contract.

agree, sounds like friend hasnt got enough for deposit, so borrows , instead of mum and dad bank.. friend bank....
what happens if the property is repossessed or in danger of?
How do you protect your investment in such a case?
Would the investor be prepared to make mortage payments to protect their investment?
Are you prepared to write it off with no ill will towards your friends?
Not an investment I would touch either..

brit1234

What happens if the price goes down. Prices are prdicted to resume falling this year, in Japan in a similar situation they fell for a decade and still haven't recovered,

Investing at the top end of a property bubble may not make sense for good returns.

lightSwitch_3

This sounds quite messy if you ask me. I've done business with close friends and lost money due to dishonesty. Don't do it unless your name is on the deed.

However if you insist you are basically giving them a loan for which you will charge them an interest. If the property goes up threefold them you should receive three fold back but it will take at least another ten years for such inflation to occur in the UK. Personally I would charge them 10%. yearly with a get out clause in case I need the money. The chances are you may not see your money again.