5 tips for co-investing in property with friends and family
Close-knit families typically do most things together - eat, travel, operate a business, celebrate milestones and special occasions. So why not invest together too? For others, it's close friends whose shared stage of life and values open up opportunities to invest together. And as housing affordability continues to hit new lows, co-investing is increasingly the only way for some to get - or keep - a foot on the property ladder.
Before putting your money on the line, work through the following checklist together to help safeguard your hard-earned cash - as well as your relationships with your loved ones.
1. Document everything
Most other investments or financial deals are put in writing, but people often think that doesn't apply when they're investing with loved ones. Big no-no. Just because people you know and trust are involved, doesn't mean you should forgo written records - for several reasons:
- You'll need them for tax purposes anyway.
- To maintain visibility over your investment goals and strategy.
- To ensure everyone understands what they own and are liable for (including ownership or profit splits and related expenses).
- To document exit plans, such as if someone's relationship breaks down or a change of circumstances forces one of you to sell out of the investment.
- To keep things logical and rational - a written plan helps you focus on making the numbers stack up and avoid emotional decisions.
Not having details in writing is a sure-fire recipe for arguments down the track, especially where large sums of money are involved. This is particularly the case when the Bank of Mum and Dad supports their adult kids (or even grandkids) to buy property.
2. Know your why
Each of you is likely to have several reasons for wanting to invest. Understanding these will help you develop your investment strategy and decide where to invest your money.
For instance, young adults may want short-term gains to boost their first-home deposit. Parents with young or school-age kids might want to create an additional source of regular income. Meanwhile, older investors may prefer to sit tight for capital growth to boost retirement savings.
Different investments suit different goals. Without considering everyone's unique 'why', you risk locking someone into an investment that doesn't meet their needs.
3. Choose the right structure
Investing is far more complex than just "buy something, then watch it grow in value". The structure you choose has far-reaching financial implications. There are upfront and ongoing costs to consider - purchase price, registration and compliance fees, establishment costs, advisory and management expenses, and so on.
The profitability of any investment affects tax liabilities and benefits. For example, superannuation has a lower tax rate than personally owned investments and offers various tax concessions. Trusts are taxed at the beneficiaries' marginal tax rates - often higher than super but with fewer access and investment restrictions.
When investing with others, using super becomes tricky unless you have an SMSF, which comes with considerable compliance costs and other pros and cons.
The right structure will be one that benefits all of you.
4. Weigh up the risks
Risk mitigation is crucial for any investment. Your approach to the first three steps will help determine how best to manage risks and maximise investment returns.
Things to discuss with your co-investors include:
- Insurances (asset protection, liability).
- Contingency plans (such as if your investment property is vacant).
- Regulatory and tax changes that may impact returns.
- Your future relationship with co-investors.
- What happens if one of you dies suddenly or becomes seriously ill.
Discussing "what-if" scenarios and planning for them upfront gives you peace of mind and lets you act faster to stem any losses if the need arises.
5. Get good, independent advice
In case you haven't realised it already, finances are complex with countless rules, tax considerations and costs involved. That's why a DIY approach can be costly - you don't know what you don't know. And the difference could be between your investment generating healthy returns or making substantial losses.
As a group, decide which advisers you'll need and who you'll use. That may include a lawyer or conveyancer, mortgage and insurance brokers, agents, stockbrokers, a financial adviser, SMSF specialist or business and trust adviser. Make sure they're licensed, experienced and reputable.
Each of you should also seek independent advice from your financial adviser and accountant. Because your personal circumstances are different to those of your co-investors, collective advice will not necessarily be in your own best interests.
Frequently Asked Questions about this Article…
Co-investing in property means pooling money with friends or family to buy property together. People do it to improve housing affordability, share costs and risks, access bigger or better investments, and help younger family members or friends get onto the property ladder when doing it alone would be difficult.
Putting agreements in writing protects your money and relationships by clarifying ownership and profit splits, tax reporting, responsibilities for expenses, and formal exit plans if circumstances change. A written plan also keeps decisions logical and reduces emotional disputes — especially important when large sums or family support (like the Bank of Mum and Dad) are involved.
Start by knowing each person’s ‘why’: some want short-term gains to fund a first-home deposit, others need regular rental income, while older investors may prioritise long-term capital growth for retirement. Aligning individual goals helps you choose the right property type, location and holding period so the investment meets everyone’s needs.
There are several structures to consider — personal ownership, trusts, and superannuation vehicles — and each has different tax and access implications. The article notes superannuation generally has a lower tax rate than personal investments, trusts are taxed at beneficiaries’ marginal tax rates, and using super jointly is complicated unless you set up an SMSF, which brings extra compliance and costs.
Budget for purchase price plus registration and compliance fees, establishment costs, and ongoing advisory or management expenses. There may also be fees for legal documentation, mortgage and insurance brokers, agents and any specialist advisers you engage.
Discuss and plan for risks up front by arranging suitable insurances (asset and liability), agreeing contingency plans for periods of vacancy, monitoring potential regulatory or tax changes, and defining what happens if relationships change or someone dies or becomes ill. Clear risk management gives you options to act quickly and limit losses.
Yes — independent advice is essential because personal circumstances vary and DIY mistakes can be costly. As a group, choose reputable, licensed professionals such as a lawyer or conveyancer, mortgage and insurance brokers, real estate agents, stockbrokers (if needed), a financial adviser, SMSF specialist and a business or trust adviser. Each person should also seek their own adviser and accountant for tailored advice.
An exit plan should be documented and explain how ownership or profit splits are handled, sale procedures if someone needs to cash out, triggers for exit (like relationship breakdown or a major life change), and how tax and liabilities will be allocated. Having this agreed and written down helps avoid conflicts and makes transitions smoother if circumstances change.
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