Building a property portfolio as a family
The current property prices means first time buyers continue to struggle to save their deposit to climb onto the property ladder. Some are lucky enough that they have access to the “Bank of Mum and Dad”. As the interest rate on savings is not favourable at present some family members are considering lending to their nieces/nephews or grandchildren.
Is this fraught with difficulties? Not necessarily as long as the details are clearly agreed and drawn up prior to any funds are passed over. If the deal isn’t clearly labelled for what it is Christmas and Family parties could get a little awkward.
The family members borrowing the money sign up for a Two or Three year fixed mortgage with the aim to remortgage once that fixed term is over and from the remortgage they release the deposit raised back to the family members plus a bit of interest. Is this crowd funding at its best as it keeps it in the family? Loads to think about before you sign up, especially having various Aunts and Uncles having a percentage in your home, but it’s your family what could possibly go wrong?
As a family you may not have any relatives struggling to achieve a footing on the property ladder, yet you have some funds you could invest in property. Would family crowd funding be a solution to achieving a better rate of return for your funds? You could adopt a similar principle as described earlier but instead of paying back the initial funds these are reinvested into another investment property. Again paperwork would need to be drawn up to ensure no family gatherings are awkward. As a family you could very easily build a great property portfolio.