Beware of Joint Ventures: Why Buying Property With Family or Friends Can Backfire

In property investment, a “joint venture” usually refers to a situation where two parties combine to purchase a property — a brother and sister, friends, or a parent and their child, where both names are on the title and both parties are joint owners. If you’re struggling to get into your first property, this can sound very tempting. It should generally be avoided.

Why Banks Treat Joint Ventures Differently from How You Do

Here’s the problem. If you’re in a joint venture with someone, your bank assumes you owe all of the money owing on the property, including all of your partner’s share of the debt. That dramatically reduces your own borrowing capacity. To make it worse, while the bank assumes you owe the full amount, they’ll still only credit you with your share of the rent received.

The bank’s reasoning is straightforward: if one party falls over financially, the other will have to cover the bills. So from the bank’s perspective, you’re overcommitted the moment you sign onto a joint venture — full liability, partial income. When it comes time to buy your next property, that overcommitment can mean no one will lend you any money at all, even though your actual personal financial position hasn’t changed.

If You Do Go Into One

If you’re going into a joint venture purely to get started, the sensible approach is to have an agreement in place upfront — one that sets a point at which either one party buys out the other, or both parties sell the property, once some equity has become available. A joint venture should never be treated as a long-term structure.

Why This Matters More Than It First Appears

The appeal of a joint venture is obvious — it feels like a way to split the deposit and get moving faster. What’s less obvious is that it can actively work against your ability to buy your next property, which is often the exact goal a joint venture was meant to help you reach. If your plan is to build a portfolio, not just own one property, a joint venture can end up being the thing that stops the portfolio from growing at all.

Frequently Asked Questions

What counts as a joint venture in property investment? Any situation where two parties combine to purchase a property with both names on the title as joint owners — commonly siblings, friends, or a parent and child.

Why does a joint venture reduce my borrowing capacity? Because the bank assumes you’re liable for the full debt on the property, including your partner’s share, while only crediting you with your share of the rental income. That combination makes you appear more financially committed than you actually are.

Is it ever okay to buy property with a family member or friend? It can work as a short-term way to get started, but should come with a clear agreement upfront — either one party buys out the other, or both parties sell, once sufficient equity is available. It shouldn’t be treated as a long-term ownership structure.

How does a joint venture affect buying a second property? Because banks see you as overcommitted to the first property, they may be unwilling to lend you anything further — even if your personal financial situation is otherwise strong — until the joint venture is resolved.

Download Your Free Property Finance Guides

📘 The Unofficial ADF Property Guide — how to structure your first purchase the right way 👉 www.integritypropertyinvestment.com.au/the-unofficial-adf-property-guide/

📗 Safe As Houses – ADF Edition — the full portfolio-building chapter this article is drawn from 👉 www.integritypropertyinvestment.com.au/safe-houses-adf/

📞 Considering buying with a family member or friend? Talk it through first: www.integritypropertyinvestment.com.au/free-discovery-call/

🎯 Want to learn how to structure your first purchase to keep growing your portfolio? Join our free ADF & Veterans Property Masterclass: www.integritypropertyinvestment.com.au/property-investing-for-adf/

-The Integrity Team