Friendships are a beneficial aspect in any one’s life, especially if both of you are on the same wavelength of transforming your lives in the financial area. 

While the majority of people centre their lives around entertainment, you can take a different route and venture into real estate investing together. Which  is a common and attractive option for many. And by investing with friends you can pool capital and level up together.

Some factors to consider when venturing into real estate together is;

• Identifying what is each of your skillset?
  - This prevents a lot of conflict and confusion from taking place during the investment process. 
  
  
• Who is doing what work? With a clear set of roles laid out it becomes easier to have a plan of what’s happening in the project.
  
  
• How will one be compensated for time spent managing/repairing property?
  
  
• Write a business contract and contingencies for what happens if one person wants out/ die.
  
  
• Will this be all cash, no mortgage? Less headache in splitting expenses.
  
  
• Mortgage? Can everyone commit to 20+ years of payment?
  
  
• What if one experiences job loss or moves out of the country?

These considerations are a must have as you’re entering into an agreement where finances are involved and it requires both parties to understand their role in making this real estate venture a success. 

Apart from the above factors, here are some best practices to employ to form a strong team. 

• Know your friends both personally and financially, since both of your names will be included on the property it is wise to understand each other’s financial situation to avoid being riddled with unforeseen debt. 
  
  
• Define ownership you wish to havee; they includes Joint tenants or Tenants in commons.
  
  Joint Tenants; ensures each owner has an equal share to the property that you own together. However, if you’re investing with a friend, this means the entire property value is included in the deceased friend’s estate, meaning this is not a great choice for friends who invest together in real estate.
  
  Tenants in Common; In this option, you and your friend own an undivided share of the property. This means you determine if the ownership proportion is 50/50, 60/40, etc.
  
  If you have more money to put down than your friend, this makes things clean and simple as your ownership matches your contribution. If one of you dies, the property will pass to that individual’s beneficiaries, so make sure you each have a will or an asset allocation document.
  
  
• Pooling your money; real estate is a capital intensive process, so it is advisable that you set up a business banking account.
  This allows you and your friends to schedule contributions to one account and ensure all business transactions are handled through one account. 

Conclusion

Investing with your friends shouldn’t make you feel nervous.
With us by your side we will help you make the right choice for you and your loved ones.

We have amazing mixed use and housing developments in Thika, Nairobi, Kiambu and Naivasha catered to your investment capacity.

They include; Thika Grove Chania, Finpark Estate, Legacy Ridges, Riverline Ridges and Bliss Water Park Naivasha. 

Contact us today on 0709 677 377 to begin your investment journey together.