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  • Property-a-holics

    Joint Venture Finance

    Hi All,I hear about using OPM and JV's to use as deposits etc, my question is : can you use JV's monies as deposits from the eyes of the lender?Will they mind /ask questions where the deposit has come from? Or can you use it pretty much straightforwardly?
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    Fernando
    They will ask where the money came from. They have to for money laundering purposes.
    Every BTL lender I know will not allow the JV partner to take a charge over the property.
    Some lenders will be happy with that, but not for much longer I suspect. They will start asking more questions and the obvious one will be, if you are leveraging to 100% what's your risk?
    Don't be too dissapointed when lenders start telling you, if you haven't got the money to invest, you shouldn't be investing.
    Probably not what you want to hear but it's the truth.
    Mark Alexander
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    Regards


    Mark Alexander - Property118.com
    Twitter: @iAmALandlord
    Hi Mark,
    Thanks for your input.
    I thought that may have been the case, but was not too sure how people were doing JV's and using their money to buy a property under their name.
    By the way the answer is 0%...?
    Thanks Mark.
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    There is a useful discussion >>> here on JV'ing that you might find helpful.
    Remember that you can always search on PT by using the search box in the top right hand corner. Smile
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    Hi Rich,
    So in your opnion you can use JV's money as a deposit and get a mortgage under you're name and the lender will be ok with that? Of course if they dont ask where it has come from then no issue.
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    I funded a JV once. I put up all the money, the partner did everything else. I had money, he had the will and the time. The properties were purchased in joint names as tenants in common. The mortgages were in both names. The 'partner' did all the work. We had a declaration of trust stating that I owned 70%, he owned 30%.
    All was going well until he decided to live beyond his means and ended up declaring bankruptcy. That's when it got very complicated.
    NEVER AGAIN!!!
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    Regards


    Mark Alexander - Property118.com
    Twitter: @iAmALandlord
    Hi mark- so you can use JV finance as you stated under both names but how about as above using other peoples funds as a deposit under your own personal name?
    Was the agreement you owned when the property was sold 70% of the profits and the investor 30%, so on the £30k profit if the venture worked out you would make £21k and the investor 9k?
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    Fernando Duzaza said:
    Hi mark- so you can use JV finance as you stated under both names but how about as above using other peoples funds as a deposit under your own personal name?Was the agreement you owned when the property was sold 70% of the profits and the investor 30%, so on the £30k profit if the venture worked out you would make £21k and the investor 9k?
    All that was created on the deal I funded was a partnership and we were both on the mortgage deeds. It would have been far less complicated if I owned the property, since I put up all the money, I took the mortgage and gave the JV partner as stake by way of beneficial interest in the form of a declaration of trust. He could then have chosen whether to register this as a restriction at land registry. I would have had less problems when he went bankrupt that way.
    The £21k, £9k split as you described was correct.
    Regards
    Mark
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    Regards


    Mark Alexander - Property118.com
    Twitter: @iAmALandlord
    Thanks for your feedback all.
    What is the current situation about as above using other peoples funds as a deposit under your own personal name to buy a property? Can this be done?
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    I see, thanks Rich. Because as Mark was saying above the lender will start asking questions where the deposit came from and may not lend to you, as this is 0% risk on you're behalf.
    I was under the impression that lent deposits as the case was few years ago, the lender would ask where it came from if suddenly you had 25k appearing in your account just before you wanted to buy a property.
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    Fernando ,
    Not telling the lender material facts is not an option, you must disclose. It is you the borrower who signs the mortgage deed and is ultimately liable, not the person who says it doesn't matter, please bear this in mind.
    Talk to a broker, I suggest Lisa Orme. Lisa can speak to the underwriter to find out if they are happy with deposit source before you do the deal.
    Rob
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