In order to achieve the 'great Australian dream' of property ownership, many individuals are turning to another great Aussie institution—their 'mates'. Property co-ownership is an increasingly popular approach not just for first home owners looking to overcome affordability barriers, but also for savvy property investors.

Co-investing offers property investors a strategy where they can acquire properties more quickly, diversify their portfolio, and share the conventional risks associated with property investment.

Creative co-owners on the rise

Jeremy Levitt is the co-founder of PodProperty, an Australian business that specialises in co-ownership advice, agreements, conveyancing and group finance. 
Mr Levitt says co-ownership—a situation where two or more people share the ownership of a property—is becoming popular among a range of individuals.

'The type of clients we assist vary from owner-occupiers to those looking for holiday homes or investment properties,' Mr Levitt said.

'We have helped friends, families, same-sex partners and investors to buy together.

'We recently organised the co-ownership of a holiday home in Queensland for five Australian couples living in Indonesia, the Northern Territory and Victoria.'

But its not just first-home buyers and holiday-home buyers that are taking part in this innovative trend.

'Many of our clients are people looking to buy their first investment property or experienced investors looking to rapidly expand their property portfolio,' Mr Levitt said. 

What are the benefits of property co-ownership?

According to Mr Levitt, co-ownership affords many benefits to property investors that may have been unavailable to them as individuals.

'Co-ownership essentially involves pooling your money with others to put a deposit on a home, combining your borrowing power to borrow the rest from a loan provider, and either paying off the mortgage on your home (for owner-occupiers), or earning a stream of rental income (for investors)'.

Mr Levitt says this makes it an ideal strategy for property investors looking to quickly expand their portfolios.

'They can buy more properties while minimising the risk of accumulating high amounts of debt,' he said. 

'Investors can enter the property market much quicker and at a fraction of the cost they would normally expect to pay if they were buying on their own.

'The costs of purchasing and running an investment property are split, including legal fees and stamp duty, and the mortgage can be paid off quicker than is possible with one person. 

'Also, people can buy a property of much greater value by combining their borrowing power with others,' he said.

Long-time mates, Greg Aitken and Peter Younghusband are two property investors taking advantage of the benefits co-ownership affords. The pair own four Defence Housing Australia (DHA) properties between them.

'Like any investment, there is always an element of risk, but this way we are able to buy more properties over a shorter space of time and share the risk,' Peter says.

To read more about Peter and Greg's co-ownership experience, read this month's co-ownership case study.

'Joint tenants' or 'tenants in common'—how does co-ownership work? 

The most common way for co-investors to buy a property together is through a legal relationship known as 'tenancy in common'.

According to Mr Levitt, tenancy in common is a more flexible form of property ownership than 'joint tenancy'.

'Joint tenants together own the entire interest in the property, but as individuals they own nothing. For example, if one party dies, their share is transmitted automatically to the remaining owner,' he said. 

'Unlike joint tenants, tenants in common can have unequal shares in the property, sell their share to anyone they like, and are usually responsible for the entire property and any financial obligations which are attached to it.'

Co-ownership Agreement—a co-investor's pre-nup

Purchasing property with another person raises significant legal issues. Most legal experts agree that is it imperative to sign what is called a 'co-ownership agreement'.

'This is a legally binding document that gives you protection should the deal turn sour, and outlines the rights and responsibilities of each party,' Mr Levitt said.

Mr Levitt says PodProperty is a 'one stop co-ownership shop', where co-owners can purchase a tailored co-ownership agreement and letter of legal advice for a cost effective single fee.

'The PodProperty Co-ownership Agreement has provisions covering everything from what happens if one party defaults on their mortgage repayments or wants to sell their share, to instruction on how the revenue is to be distributed and how the operating costs will be split,' he said.

To find out more about PodProperty click this link.
 

About Jeremy Levitt Jeremy Levitt and business partner Jonathan Stambolis started PodProperty in 2006. Identifying a growing trend of property co-ownership emerging in Australia, Mr Levitt anticipated the need for a service that provided co-investors with a proper legal framework in which to facilitate purchasing transactions. A former corporate lawyer, Mr Levitt believes that housing affordability is one of Australia's most complex problems and that PodProperty is an example of identifying a problem and coming up with a creative solution. PodProperty counts some of Australia's largest lending institutions and property developers as its partners, including the Commonwealth Bank of Australia and Wizard Home Loans. Mr Levitt describes himself as an energetic and innovative entrepreneur, and was recently included in Smart Company magazine's top 50 'idols'. He is also a founder and director of 'Service Seeking', an online market where people bid to do work for others.