Best way to structure this deal

Sounds like a very good deal to me. Go for it... so long as he actually knows what he is doing and is qualified to repair the damage :)
 
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Phantom Shadow said:
You mean it would cost £200k to buy out. Why would you deduct the initial investment? Each owns half the house. House is worth £400k, so each owns £200k as you said. Buy out would cost £200k to buy the other partners 50% share.
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Yeah, you're totally right, I don't know what I was thinking there!
 
Glaucus said:
You're getting a far better deal .
The free "rent" is neither here nore there, as you can't rent it out in current state.
So you've lost nothing and gained free labor.

Just take it, why try making it more complicated than it is.
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The only thing I'd be concerned about is it taking forever. Once people settle in, if they have other commitments, it's amazing how long they can tolerate living in a building site.
 
Stretch said:
The only thing I'd be concerned about is it taking forever. Once people settle in, if they have other commitments, it's amazing how long they can tolerate living in a building site.
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Agree took me ages renovating my house while living in it.

Sounds like a lot is hinging on this guy doing the work... What if he was too fall ill or get injured?. That could seriously hold up work on the property with him living there.
 
It would be a 100% disaster.
You will always feel your mate is dragging his heels in order to continue his free/cheap accommodation.
EVERYTHING hinges on your mate having the cash to do the house up, the time to do it, the ability to do the work and the honesty not to cut corners and bodge stuff.

I thought having a bad lodger was a nightmare. This would be far worse.
 
OpenToSuggestions said:
It would be a 100% disaster.

You will always feel your mate is dragging his heels in order to continue his free/cheap accommodation.
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Maybe. But it does sound like his mate (and OP) will do very well out of getting the job completed. Like, quite a lot better than subsidised accommodation.
 
Cold Fusion said:
Not sure what the rules are in New Zealand but a couple of things that don't seem to be mentioned here.

1. You won't be able to buy this property using a mortgage as its a development investment. If you both have the funds to buy then fair enough but i would have thought NZ Banks would see this as a business loan not a mortgage.

2. Not sure whether NZ has an equivalent of Building Control, but from what you have said it sounds like an earthquake damaged property requiring significant structure work (Piling). If that's the case in the UK building control would not let anyone 'live' in it until suitable for occupation, which is likely when the building in structurally sound, safe and has statutory services.

3. If you can make it work, make sure you employ a structural engineer to design or at least consult on the repairs. You may also need a Party Wall Surveyor if its not a detached property as if your work causes damage to neighboring property you are liable and make sure you have the appropriate insurances in place.
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And if the house is uninsurable then you won't get a mortgage in the first place.

Plus if the house is structurally damaged, hence not insurable, then I am sure there is going to be some heavy inspections required for approval and the work needed will require some serious engineering skills.that certainly isn't a DIY job
 
friends + business deals = train crash waiting to happen. I'd say no, if he needs to live somewhere he goes and rents somewhere off his own back and you both pay 50:50 on labour to get it done by an external builder. This way when it comes to sell up time / rent out time you both know that all profits are 50:50 down the middle and you don't need to start cutting deals around how much labour time / mate time etc he or you put in.
 
D.P. said:
And if the house is uninsurable then you won't get a mortgage in the first place.

Plus if the house is structurally damaged, hence not insurable, then I am sure there is going to be some heavy inspections required for approval and the work needed will require some serious engineering skills.that certainly isn't a DIY job
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Why would we apply for a mortgage on a house that's uninsured? We're applying based on Land Value. Or should I say, we've already applied and already been approved by all the lenders our broker contacted.

Feels a bit like a 'spec me a new PC' thread whilst some people are arguing about the color of the case.

Either way, thanks for the insights. Food for thought and we'll make a decision that will include some of the ideas thrown out here.
 
If he's paying half the mortgage then if you were to charge for him living there then half of that would go back to him.

If a builder was on £100 a day and the rent was say £400 a month he would only need to do half a days work a week.

The money your paying for the mortgage isn't going anywhere it's paying off the money on the property so if you don't need that money now does it matter how long it takes him to finish?

If you want a quick profit then set a finish date.
 
Moses said:
Not if they get someone else in to do the work. And if someone's living there without having to pay rent, they have an incentive to eek it out... whereas if they live off site they have no incentive to do the work slower.
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The's already said they aren't getting someone in to do the work.
Best thing is just make a proper contract with a time limit on it.

And on the other hand if he is motivated, then he'll get far more done whilst living there.
 
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