As a young professional, isn’t it time you bought a property or a share in one?

Four or five like-minded friends who form a syndicate, pool their resources and buy a property together in their 20s will be way ahead of the pack – and on to their second or third property – in just 10 years, especially since it is currently a buyer’s market.

This is according to Paul Stevens, CEO of Just Property, who has this advice for young professionals who might be considering joint property investments and talks about the legalities new landlords need to consider:

1. Joint property investments for young professionals

Historically, property syndicates have been a popular choice for those wanting to tap into various property sectors, be it commercial, residential, or retail, says Stevens.

“While individual properties bring in steady cash flow and some tax benefits, joining hands opens up the potential of building a property portfolio that might be unattainable solo. Plus, with co-investors, the risks are distributed.”

This is even more pertinent for young adults at the start of their careers. Stevens believes the sooner one dives into the property market, the better. “Later in life, financial responsibilities are far greater,” he says.

“Rather cut back now on the rent you are paying into someone else’s pocket, downscale the car you drive and other depreciating assets, and focus on amassing future wealth.

“Forming a syndicate with fellow young professionals is a great idea as long as you follow certain important pointers.”

Stevens shares these keys to a successful syndicate:

Communication and alignment:

Stay on the same page regarding your property goals and the principles to achieve them.

Shared responsibility:

Ensure everyone knows their role in the venture.

Clarity in strategy:

Define your focus. Are you aiming for short-term gains, regular rental income, or a long-term gamble on an emerging area?

It’s essential to think about how the number of members affects the property usage. Will some or all of you be sharing the premises? This can make things complicated. Get professional advice and agreement upfront.

Scanning the current market:

According to Stevens, new properties and off-plan purchases often offer significant savings on certain fees and duties.

“Distressed property sales, like those at auctions, could also offer properties at a markdown, but there are risks.

Don’t just look for the cheapest deal,” Stevens advises.

“Rather find the places where value can be added, like potential for subdivision or rezoning.”

Familiar areas and property types might feel less risky, but it’s still a good idea to get as much information as you can from a property professional who knows the value and history of property transactions in a particular node.

Call in a legal eagle:

Once you’ve zeroed in on a property, it’s important to have a comprehensive, signed agreement between the investors.

This minimises ambiguities and the chances of misunderstandings.

Key questions your agreement should address include:
• Financing methods
• Cost breakdown: bonds, maintenance and taxes
• Repayment details
• Contingencies for missed payments
• Property usage guidelines
• Exit strategies for members
• Portfolio management
• Communication protocols

“Agree to the governing rules up front and map the potential pitfalls. Insist on complete transparency and shy away from anything that isn’t clear-cut,” says Stevens, who stresses the need for robust legal counsel, financial advice, and skilled property guidance.

2. So, now you are a landlord

If you’re looking at renting to students, it is highly recommended that one (or both) of the student’s parents sign the lease agreement as a tenant with their child as the occupier.

This will have the effect that they would be jointly liable in terms of the lease agreement as the student. This will safeguard the landlord from a situation of a student who fails to pay his rent.

If the parents are tenants, the moment the student is in breach of the lease agreement, be it by not paying the rent or by not complying with the house rules, the parents will also receive the letter of demand and the prospects of resolving the matter amicably and effectively increase dramatically.

If you all decide to live in the property you’ve bought, this will pertain to you, too.

Remember the Rental Housing Act deals with multi-let accommodation, specifically in requesting the landlord to formulate a set of house rules to regulate the relationships between the occupants of a multi-let property.

These house rules can deal with things like sleepovers, study times, pets, and parties at the premises, as well as details around the dos and don’ts in the communal areas.

It is advisable to display these house rules throughout the property and to send reminders of the content to all tenants regularly.

The Rental Housing Act is clear on the terms to be included in a lease agreement and the things that have to be dealt with.

Make sure you comply.

It is worth your while to pay for the services of a managing agent who can ensure that the lease covers all requirements and eventualities, has the time and resources to properly vet the credit history of prospective tenants, will collect rent and deal with any non-payment issues, plus has trusted service providers for any maintenance.

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