Co-owning a rental property is an alluring option, especially for first-time property investors. However, before you sign your name along with a friend’s or a family member’s, make sure you are aware of the pros and cons that come with sharing the benefits and responsibilities of a rental property.
The Queensland Property Law Act 1974, under Section 33(1), allows for property co-ownership involving two or more persons in a “joint tenants” or “tenants in common” arrangement. The entire interest of the property is under joint ownership and none of the parties own the property individually. However, shares and interest are not required to be equal.
There are some pros of co-ownership. Co-ownership allows you to divide the costs when purchasing the property and then, later on, maintenance expenses. Depending on the number of joint owners, you need only to put half or a fraction of the cost. Mortgage can get paid faster because more than one person is contributing to it. Obligations can be agreed upon among co-owners, ensuring all parties are on the same page regarding parameters involved.
There are also risks that come with sharing a property investment. Disagreements regarding the management of the property, mortgage and income could arise. There’s also the possibility of the property needing to be sold or a co-owner buying out. This is why a co-ownership agreement is vital and acts as your insurance. The agreement should also serve as your guideline when it comes to property management so issues and disagreements can be avoided in the first place.
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