Property business

xopalx

Hi I am a 1st time poster here after some valuable advice.

Myself and a few friends are thinking of going to the property market, where we plan to buy a few houses to rent out through the buy to let route.

We are looking at possible ways of doing this and think that setting this up through a business might be a good way.
We are all willing to contribute equally to get the business up and running and then buy 1 property at a time. And hope by end of 2012 we have around a 3 to 4 property portfolio.

The advice I was after is if setting up a ltd company was the best way to go about this.
I know if we decide to sell a property via this route we do not get the CGT allowance, however we are only looking to rent and are happy for any profit to remain in the business for several years.

Has anyone on these boards done this?
Are there other Pros and Cons we should consider.

Also does anyone know how easy it is to get mortgages for ltd’s

fguk

My educated guess would be that to get a mortgage for the ltd, at least in the beginning, mortgage companies are going to want some hefty personal guarantees. You arent planning to hide behind your ltd (should there be problems), but some would, and that makes them a bit uneasy.

The structure of a ltd allows you to set it up and designate shares to people, so the idea of doing that with your friends to run the business is probably sound. LLP`s might work also, but you need to talk to an accountant to get the best advise.

Also someone will come along and say "get a partnership agreement", so I might as well say it first!

paddyrg

Also be aware it will trash your friendship if the agreements are not 100% clear about what happens in what circumstances, and who does what division of labour, and to what quality. Working with 1 friend is tough enough, but more than one, be prepared for it to end in tears. It may not, but money changes everything.

xopalx

What is a LLP??

Suarez

xopalx wrote: »

What is a LLP??

Limited Liability Partnership

xopalx

Thanks guys,

Anyone know any good companies to approach regading getting mortgages for companies.

Suarez

How much are you all contributing to the business? And what is the value of the properties expected to be?

paulwf

This just sounds like something that will end in tears:

- friends rarely make good business partners

- if everyone has an equal share you'll potentially reach deadlock if there is a disagreement causing all sorts of trouble

- what happens if someone needs to get a more immediate return on their investment?

What value are these friends adding apart from injecting capital? If one was a decorator, another a gardener and another an electrician for example that could be a good team as you could save a huge amount on maintenance costs.

Pennywise

The main problem with this kind of thing is where "A" doesn't want anything out of the company for a decade or more, but "B" wants a steady stream of income every year and "C" suddenly finds that they need a chunk of money and wants to withdraw a large lump out.

If you can agree, preferably with a binding legal agreement as to what everyone of you will get and when you'll get it, then you're halfway there to having a realistic plan.

xopalx

We will all be contributing an equal amount. (yet to be decided but maybe between 35k-50k)
It will also be made clear that this will be a long term business, were our money will be tied for for about 5-10 year.

We all have other jobs so wont be doing on the repair jobs ourselves. Our main aim is to buy and rent out as there is a demand for rental properties in my neck of the woods so the company will also be making profit from rent.

Working with friends is the option chosen as we have known each other for over 15 years and know we can work well with each other.
We are all after the same goal.
Just need to get everything on paper and then form a company.

xopalx

Suarez wrote: »

How much are you all contributing to the business? And what is the value of the properties expected to be?

We are looking to put in about £35k to 50k each with property values upto a max of 225