Investing
with a Friend: A Guide for Kent Landlords

In this two-minute read, we ask if it’s wise to buy
a rental property in Kent with a buddy.

Purchasing
a buy-to-let property with a friend is an appealing prospect – on paper, at
least.

But
it’s important to carefully weigh up the risks and rewards before taking the
plunge.

Here’s
a list of the pros and cons of becoming a landlord with a friend.

The pros

• The role of landlord comes with a plethora of
  responsibilities. Sharing these duties with a trusted friend will lighten
  the load.
• Your co-investor may have a different skill
  set to you, meaning you can play to your strengths while they play to
  theirs.
• Most lenders require larger deposits for buy-to-let
  mortgages. Splitting your investment means you don’t have to pay as much
  cash up front.

The cons

• You never really know someone until you’ve
  gone into business with them. If the two of you disagree on how to manage
  the property, the friendship could suffer.
• If your tenant falls into arrears, as
  landlords, you’ll have to stump up the cash. However, if your investor
  buddy can’t pay their share for whatever reason, you’re liable for the
  shortfall.
• You might be on the same page as your friend
  right now, but people’s circumstances change. Further down the line, your
  friend may decide that they want to sell up when you don’t, or vice versa.

Tips

If
you’re still keen to invest with a friend, here’s how to mitigate some of the
risks.

Get a
good lawyer

You
need a legally binding agreement that states:

·
How much each party is investing

·
The ownership split

·
Responsibilities regarding bills and maintenance

·
What happens if one or both parties want to sell

·
A dispute resolution mechanism should you disagree
on an issue

Get a
will

In
some cases of co-ownership, if one party dies, the property automatically goes
to the other person unless otherwise stated in a will.

Don’t
feel pressured

If
your friend thinks a formal agreement is unnecessary – they may see it as a
sign that you don’t trust them – politely, but firmly, pull out of the
deal.

Without
the right paperwork in place, you risk getting caught up in a protracted and
messy dispute later on.

Going
ahead based on a wink and a handshake could cost you the friendship and much
more if things don’t turn out according to plan.

For more advice on investing in the buy-to-let
market, contact us here at CWB Property.