Paul Glossop: Welcome to Pure Property Investment one on one. Again, today I’m joined by Aaron Christie-David. Aaron is the director of Atelier Wealth. He’s a mortgage broker. He’s a property investor and he’s and expert and in understanding structures of financing properties both owner-occupier or investors or investment properties. One thing that I’ve seen a lot of lately and probably more so on the last year or two in the rise and rise of prices is probably been, property prices from Sydney and Melbourne more specifically has been the level of interest in owning property potentially with someone else or percentage ownership and property in general, whether being an owner-occupier or an investor. And I know from your side of things, that you probably have a fair bit of insight of things that people need to understand and what their options are if you don’t mind sharing.
Aaron Christie-David: Yeah, sure thing. The rise of fractional ownership has mainly come through models like “brick eggs”. And it has its place in the market. People want to get into the market but don’t necessarily have maybe five, ten or even twenty percent deposit. So, what options do you have if you don’t have a large deposit? And one option that we do offer is buy a co-purchasing property maybe that’s with a friend or maybe that’s with a sibling. Both have their merits. If we look at buying with a friend and let’s say for example, I have a 50,000 dollar deposit and you have a 25,000 dollar deposit, what we can then do is looking at increasing my ownership of the property and lowering yours relative to the deposits that we’re coming to the table, which is fair.
When we’re buying with friends, what we often say is let’s put everything on the table, which is you’re coming into it, what’s the exit strategy as well. Because what we don’t want to do is have the situation where we’re forced to sell that property in a few years’ time as well. So we’re saying… the assumption is we’re going to hold this property for ten years. We’re both committed to it to get the maximum out of it as well. The next part is what we do is making sure that each party’s covered for the debt they take on with a financial planner to protect themselves but also to protect the other borrower’s interest as well.
The next part really is around future planning. So let’s say, I want to buy a property in the future in my own name. So, how do the banks look at this set up that we have together as well. So bank A will say, they’re going to assess me for 100% debt and only taking 50% of that rental income. Whereas bank B is going to say, “We’re going to save 50% of that debt and 50% of the rental income as well.” Which I think you have a better borrowing capacity with bank B for example. So, that is some of the intricacies we have not only now but in the longer term as well.
Paul Glossop: Mate, there’s so many things that you’ve spoke about there that I think is super important when it comes down to owning a property with someone else or buying a property with someone else. I think probably for the layman or for the first-time investor who is looking at doing this, some of the things that you probably outline there, they might think, this is just too hard. But what I’d say is don’t be discouraged because the opportunities are there and opportunity cost over a two, three, five-year period are immense, when we talk about the ability or the inability for some people to get into the market at that time. I think the key as you’d outline there is having the discussion, putting it all in the table at the front end, and then saying, “Okay, here’s what we want to get to. Here’s our plan for us potentially as a collective of one, two, three, four people. And also, here is what I want to do on a personal front, so for you as the mortgage broker, and also potentially working with a financial planner and an accountant, who can all talk about that outcome and how we can plan and strategize the right property, the right structures and ultimately the right mortgages. Our job then is to go and source that right property accordingly. It is something that we do as professionals to take the stress and probably the unknowns away. But the key is make sure you go speak to someone first and don’t just think, why I’ve got enough for another deposit or I’ve got another friend or a family member or a partner who is keen but we don’t really know how to start. Start with a discussion and then lay it out and then move from there.
Aaron Christie David: And it’s a bigger shame when someone puts their hands in the air going, “I can’t really buy a property.” I always say look, there is a way. There are options available for you as well.
Paul Glossop: Unequivocally mate. And again, insightful always. Guys, if you do get in touch with Aaron and anyone from his team to discuss what we’ve talked about today and any other aspects of mortgages and finance structures his contact details are at the bottom of the screen. Similar to ours for an owner-occupier or an investment property perspective, feel free to give us a call. We can have a chat sometime soon. Cheers!