Partnership offered in Property developing business advice needed

[gemsy40]

Hi,

I have been asked by my neigbors who i have no known for 5 yrs now if i would be interested in investing in property developing, they are husband and wife team that are in their late 50's and have already bought and sold about 5 properties, 2 were in Spain and their last venture made them £30k proffit a few months ago. They are looking for someone who can also help with the work as they want to turn the properties over quicker which im more than happy to do having always done my own decorating, including tiling and minor repairs. My neighbor does most of the repairs himself, plumbing etc but as i work for a property services repairs team i also know lots of tradesmen.
As i would be investing i want to make sure that i ask them the right questions and get some advice on legal issues. No amounts have been discussed as yet but i could get a loan on my property and possibly from another source.
Any advice would be welcome
Many thanks

[Kaz]

It sounds to me as if it could work quite well but you'd need to ask questions like:
If I put in half the money to buy the property, would my name be on the Deeds as joint owner?
Will there be a formal Partnership Agreement?
Would major decisions be made jointly?
How would we decide on profit sharing i.e. percentage?
What are the tax implications for you i.e. Capital Gains?
etc. etc. etc.

It sounds like it would be quite an equal partnership as although they have the experience, you have the benefit of having good, reliable and honest (presumably) trade contacts which could be invaluable.

Having said all that, you need to think very carefully about it as, working with friends/relatives/neighbours might sound fine but what if it all goes wrong and you fall out big time, are you prepared for that. I say that because I did my first development with someone I'd known for 35+ years and it didn't work out too well as I ended up doing a lot more work on my own while she went on holiday shortly after starting the project, 'didn't feel well' etc. etc. but we had already agreed we would split the profits 50/50. It left quite a bitter taste and is the reason I now 'develop' on my own!

Anyway, if you do decide to go ahead, I wish you the best of luck.
Kaz

[gemsy40]

Hi Kaz,

Thanks ever so much for the reply and advice, there are 1 or 2 points you made that i would have not have thought to ask and am sure this advice will help others who are new to all this too.
I did speak to my neighbors in the week to let them know i was still interested so they could discuss between them whether they were serious about a partnership and they could put some facts and figures together, then if they want to we can get together and discuss this more indepth.
At the moment i think they are too busy playing with their new toy, a brand new 09 campervan which they bought from the profits of their last house sale.
Anyway thanks again Kaz.

Gemsy