Deciding to invest in a piece of property with family members is not as easy a choice as you may have thought. Logic and emotion have to find a balance.
Advantages of Investing in Property with Family
One of the primary advantages of investing in property with family members is that you can pool all of your resources together and buy a more expensive piece of property than you could usually afford. Since each family member that invests in the property has a stake in it and an ownership interest, you get to divide the risk amongst a number of different people too. You are not stuck having to shoulder the entire loan and are able to split the mortgage payment up equally among all family members involved. This reduces the chances that you will fall behind on the mortgage or risk defaulting. Another advantage of having family members invest in a property is that you have a greater financial backing. This increases your chances of getting approved when doing a home loan comparison. You can always use the credit scores of the stronger family members so you can get the lowest interest rate possible on a loan or home refinancing. This can result in lower mortgage payments and you get the advantage of being able to make some money with your closest family members.
Disadvantages of Investing in Property with Family
Unfortunately investing in property with family members is not completely positive. There are some drawbacks to doing business with family. One disadvantage is that family members may have a hard time separating business dealings from personal life. Some family members may not treat the venture as professionally as they should. This could result in missed mortgage payments or a failure to cover responsibilities and duties. Doing business with family members can also lead to hard feelings. If things go sour with the investment property, then it can damage the personal relationship that you have with each other. Nothing makes a relationship turn badly as quickly as borrowed money and ruined credit, right? In short, if you do buy an investment property with other family members, make sure you all understand the risks, rewards, and emotional aspects of the purchase. Good luck!
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