Buying With Friends

tattyhare

Hi all,

A group of friends and I have been discussing the possibility of starting up a property portfolio as a group. We each have a surplus income of about £2k p/m so the idea being every x number of months, putting together the deposit for a new place and build up from there.

My question to all are, does anyone have any experience of this. How best to set up - under a new company name with shares for each property is the current thinking and some general thoughts (beyond, be careful getting in to business with friends..)

Thanks!

kinger101

I'd agree the company route would be the best option, but potential problems are;

(a) how would the share value be calculated when new share capital is injected;
(b) particularly if someone didn't want want to invest in another property;
(c) how do you value shares when someone wants to dispose of them?
(d) are they allowed to sell shares to external parties?
(e) how do you arrive at decisions to sell a property?
(f) how do you decide how much profit to distribute and how much to reinvest?
(g) how easy will it to be get finance as a new company?
(h) who will take on the companies legal responsibilities (tenancy law, companies house, taxation) and who will they be remunerated?

In my view, do it solo or invest in a property fund for an easier life.

tattyhare

Really appreciate your detailed response - certainly additional to think about.
We were thinking of a 'new' company for each property, rightly or wrongly, which may cover some of the issues you mentioned. Finance for a new company is certainly something we will have to look in to.

marksoton

You're mad. And asking for trouble.

eddddy

tattyhare wrote: »

Really appreciate your detailed response - certainly additional to think about.
We were thinking of a 'new' company for each property, rightly or wrongly, which may cover some of the issues you mentioned. Finance for a new company is certainly something we will have to look in to.

To put it more bluntly - how will you make decisions and resolve disagreements?

E.g. 4 people want to lay laminate floors, the 5th person thinks laminate floors are a waste of money. Do you overrule the 5th person... force them to pay... take them to court if necessary?

Or one of you screws up and orders the wrong building materials - will the rest of you happily pay again to order the right ones?

david_a

Do you like your friends. If so NEVER go into business with them.