Buying property as a group

"Creating an investor group is a clever way of buying property off plan overseas. It can help people spread risk and by clubbing together enables you to reach a higher investment".

A popular way in which to consider investing in overseas property is by buying as a group. A group of colleagues, friends or family members could get together and purchase property. The purchase contracts for the property are prepared to state the names of each individual buyer.

Here are the benefits of creating an investor group:-

• Reduces each individual investor/buyers exposure to risk in a given property market. Rather than investing in one property, by buying in a group you could spread your available investment into other markets with your group. Allowing you also to buy other property in other markets collectively.
  
  
• Mortgage finance at completion of the property(ies) can be based on the income of all investors in the group i.e. if there are 4 buyers, 4 individual incomes could be taken into account for lending.
  
  
• By leveraging your money you can achieve a larger investment, and benefit from growth on the gross purchase price of the property i.e. the total initial investment for example could be 30% of the purchase price which would be split between each investor, however each investor will benefit from growth on the gross purchase price not just the 30% invested which in turn gives greater returns.
  
  
• Buyers with little or no cash could look to borrow money to invest. Unsecured lending is still widely accessible in the UK regardless of many major banks tightening lending criteria. Up to £25,000 per individual could be borrowed (subject to status). The investor/buyer could treat this loan as an investment vehicle and make the monthly repayments or we have a scheme whereby payments are met by the developer (subject to terms and conditions)
  
  
• Allows the purchase of higher value property using the buying power of the group, property that may not be affordable for just 1 member of the group. Enabling the group the benefit from higher value property, likely to be larger and better located which in turn will bring higher returns and benefits.

It is important when establishing an investor group that this is done with people you can trust. Ultimately once property that you buy as a group comes to completion, all of the buyers need to be “singing from the same hymn sheet”.

We have assisted many clients now who already buy in groups and benefit from the points highlighted above and this way of buying has proved highly successful. Typically these clients are no more than 4 family members or friends all with an interest in investing in real estate to create a pension fund and/or to take advantage of the lifestyle benefits of owning luxury property in highly desirable resorts.

Groups can invest in SIPP compliant developments as a group buy synidicating the investment using Self Invested Personal Pensions (SIPP's). Buying in groups is a great way in which to buy overseas property and certainly something to consider.