Going halves on a property...

danster

Hi,

Im a FTB. Im looking to go halves with my boss on a residential house that we'll turn into offices (with a minimal amount of effort - hopefully! - just a few computers, desks etc...). My boss has half the money in cash and ill get a mortgage for the other half. This mutually benefits us: I get on the ladder and my boss gets new offices in a better location and the rent he'll be spending will be going back to him and not another landlord. The company will rent the offices (Ill be renting a cheap flat elsewhere). So from 'day 1' we have a tennant which pays off the mortgage, council rates etc... So atleast Ill be able to get on the property ladder, even though I wont actually be living in the property.

My boss and I have spoken about exit strategies, and that our relationship within the company and the relationship with the property will be two different entities. So if I leave the company, we will still share the property. We're both in it for the investment, so I dont see one of us wanting to sell it if its ever in negative equity, and if he ever wanted to sell it then I would take the money and buy somewhere else (its not as if Ild be living there and so would be turfed out of home). I dont ever see us falling out, we're both old enough not to have knee jerk reactions and fall out and shout at each other!
Obviously this is a massive gamble, and theres no saying that we definatly wont fall out with each other or there will be bad feelings or the company wont go under. But I see it as either buying some p1ss-ant 1 bed studio in a rough area that Ild hate going back to each night, or a gamble that may be a fare investment and enable me in a few years to get a modest place of my own.

Theres so many questions I have - should I get a BTL mortgage? how easy is it to get a 'change of use'? and so on. Please post any potential problems that may arise or things I should think about. Has anyone had first hand experience of changing a property from residential to commercial use? What are the right questions I should ask my mortgage advisor/solicitor/council? Are there benefits to getting a BTL mortgage as opposed to a normal one? Would there be any CGT to pay? Because my boss' half will be cash, is it best to go to a mortgage lender and make out that I have one massive deposit?

OK, thanks for sitting through all that. All posts are welcome!

MJMum

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Generali

You need to sort out what happens in the event of a loss/negative equity, don't just assume this stuff. You see a few tales of heartache on these boards where people just did it on trust or assumption: get everything written down by a solicitor - that way if you have one assumption and your boss another you've got an agreement, in writing you can consult.

betti911

Yes I would def each consult an independant solicitor and get any agreement between you in writing. It might be an expense at the moment but for peace of mind it would def be worth it.

epoman

Hope for this:

danster wrote: »

I dont ever see us falling out, we're both old enough not to have knee jerk reactions and fall out and shout at each other!

but, prepare for this:

danster wrote: »

....theres no saying that we definatly wont fall out with each other or there will be bad feelings or the company wont go under.

Have your agreement put in writing. A frank discussion between you now about what you will do if things go wrong will save a lot of future heartache if the worst does happen.

danster

Thanks for your input. Ive found out today that Ill need to get a commercial mortgage. Is that right? Its not the company thats buying the property, its me, and Ill be letting it to the company. Just like if I were to buy a house and rent a room to a tennant. Im probably over-simplifying this.