partnership share advise please

kou

New Forum Member
Registered
Hello everyone,
just purchase a property in GTA with two of my daughter's friend as a partner. wondering what do you suggest on % of ownership and what will be fair for everyone. There are 4 of us on title( my wife and i $200K, my daughter's girl friend $40k, another their friend $300K).
This is a 3 story home without a basement. one person will live on the main floor and we will build a kitchen for him and he will occupy the entire main floor that attach with the garage and a walk out back yard and a bath room. My daughter and her friend will live on the third floor ( there are 3 bedrooms). and use the second floor 's kitchen, living room. They might bring in another friend to offset some of the mortgage payment as well. They all agree to pay the same payment towards the mortgage payment and share all other living expense.
I wonder if this is fair for everyone by calculate it by portion.
total cash on hand to purchase $300K+$200K+$40K = $540K

$300K : 30/54x 100= 55.56%
$200K : 20/54x 100= 37.04%
$40K: 4/54x100= 7.41%

I usually want to own 100% of a property ( okay, my wife own it 99% and 1% for me)
however, Toronto is so competitive at this market and we have to find a money partner to purchase. This will be my daughter's principle living place for a long time. my daughter doesn't want to be on title and i will put her name on my will for our share on this house. Therefore, this house is not consider as an investment property for me. it is a nice living place for my daughter. she might have to buy out her friends share in the future. I just need to set it right at the beginning and to be fair for every partner.

any words of wisdom are much appreciated.

Chio
 

Thomas Beyer

Senior Forum Member
REIN Member
It’s a recipe for disaster.

Own it 100%, or don’t do it.

Or gift the money to your daughter and she owns it, and be prepared to lose all that cash.

Or lend the money to your daughter so it doesn’t end up 50% with her friend in 2-3 years.

How stable are these friendships?

Who is on the mortgage? How much is the mortgage on top of your cash ?

Buy it yourself and rent it to them with an option to buy.

Friends come and go. Who evicts whom once mortgage is in default ? Who pays for leaky roof or broken windows? Who buys out whom if desired at what terms? Who can force a sale if things sour?
 
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Matt Crowley

Senior Forum Member
Registered
I would not do this either. What a nightmare.

Own 100% or nothing. Agreed with Thomas, provide an option to purchase. There is no difference between owning and renting when the bank is renting you the capital to purchase, and plenty of ways to gain a real estate proxy for performance on the cash through investment in the public markets.

Real estate can go up and down in value!

If you were deadset on this combined purchase you are in for some nasty fights in the future. What happens when someone wants to buy others out? There is clearly not equal economic footing - how to protect those with weaker economic footing from getting muscled out?
 
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