Two mates, a few beers, and someone says it: “What if we just bought a place together?” I have had this exact conversation land in my inbox more times than I can count over the years. A sibling pair who both wanted in on the property market but neither could get there alone. Two workmates who trusted each other more than they trusted the banks. Cousins pooling a deposit because the market would not wait for either of them to save it solo.
Buying an investment property with family or friends is not a fringe idea anymore. It is becoming one of the more common ways time-poor professionals and early investors get their first property, or their second, when going it alone feels out of reach. And the numbers back this up: joint home loans between friends and family jumped roughly a third in the twelve months to mid-2025, with Victoria and New South Wales leading the charge.
I get it. Splitting a purchase with someone else feels like it should be simple. Pool the money, buy the place, split the profit. In practice, it is one of the more legally and financially loaded decisions you can make in property. Get the structure right and you have accelerated your entry into the market by years. Get it wrong and you have tied yourself to a legal and financial relationship that is genuinely harder to exit than a marriage.
Why More Australians Are Buying Investment Property with Family or Friends
The logic is fairly straightforward. Property prices have kept climbing while wages have not kept pace, and for a lot of people the maths on buying solo simply does not work, not yet anyway. Pooling a deposit with a sibling, a close friend, or a parent cuts the time to entry dramatically. Instead of five more years of saving, you might be six months away.
There is also a confidence angle that does not get talked about enough. A lot of the early investors I speak with, people sitting on zero or one property, are not short on ambition. They are short on certainty. Buying with someone they trust, who is doing the same research and asking the same questions, makes the decision feel less like a leap and more like a considered step. I have seen this play out dozens of times: the deal that felt too big for one person suddenly feels achievable for two.
For the time-poor professional stretched between a demanding job and a young family, co-buying can also be about capacity rather than capital. You might have the income to service a loan but not the hours in the week to do the due diligence properly. A co-buyer who shares that load, or who brings equity while you bring analysis, changes what is possible.
None of this means buying an investment property with family or friends is the easy option. It is a genuine alternative with a different risk profile, and that risk profile deserves the same scrutiny you would give the property itself.
Joint Tenants or Tenants in Common: Getting the Structure Right
This is where most people come unstuck before they have even exchanged contracts. In Australia there are two ways to legally hold property with someone else, and the choice matters more than most buyers realise.
Joint tenancy means you and your co-buyer own the whole property together, with no defined individual shares. If one owner dies, their interest automatically passes to the surviving owner, regardless of what their will says. This structure suits couples. It rarely suits siblings, friends, or business-style arrangements, because it assumes you want your share to pass to your co-owner rather than your own family.
Tenants in common is the structure I recommend for almost every co-buying scenario involving family or friends. Each person holds a defined, separate share of the property, whether that is a clean 50/50 split or something reflecting unequal contributions, say 60/40 if one party put in more deposit. You can sell your share, will it to whoever you like, and structure your tax position around your individual portion. Where folks get caught off guard is assuming the default structure a conveyancer sets up is the right one for their situation. Ask the question directly. Do not assume.
If you are still working out how ownership structures affect your broader portfolio strategy, it is worth reading through our guide on property investment ownership structure, which covers how trusts, companies, and individual ownership each change your tax and risk position as you scale.
How to Split Deposits, Loans and Ownership Percentages Fairly
Here is what most people get wrong when co-buying with family or friends: they agree on a rough percentage split verbally and never revisit it once the excitement of settlement wears off. Ownership percentages should reflect actual financial contribution, not just goodwill.
If one co-buyer contributes the entire deposit and the other contributes ongoing loan repayments, your ownership split should reflect that, not default to an even 50/50 because it feels fairer in the moment. Work through:
- Who is contributing to the deposit, and how much
- Who is named on the loan, and whose income is being used to service it
- Who covers ongoing costs: council rates, insurance, maintenance, property management fees
- What happens if one party’s contribution changes down the track, for example a job loss or a career break
All co-owners on a loan are jointly and severally liable, which means if your co-buyer stops paying their share, the bank does not care whose fault that is. You are still on the hook for the full repayment. This is the single biggest risk in co-buying and it is the one people think about least before signing anything.
If you are earlier in your journey and still working out how to fund a first purchase at all, our piece on how to buy your first investment property in Australia is a good place to start before you bring a second buyer into the equation.
What Co-Buying with Family or Friends Does to Your Tax Return
Tax is where a lot of co-buying arrangements with family or friends either pay off nicely or become a headache at tax time. Under a tenants in common structure, each owner declares rental income and claims deductions in line with their legal share of the property. A 60/40 split means a 60/40 split of income, expenses, and eventually capital gains.
Negative gearing still applies the same way it would to a sole owner, but the benefit is split according to ownership percentage. If one co-buyer earns significantly more than the other, there can be a case for weighting ownership toward the higher earner to make better use of the negative gearing offset, though that comes with a trade-off: a bigger share of capital gains tax when you eventually sell. It is a genuine strategic decision, not a box-ticking exercise, and it is worth running the numbers with your accountant before you settle on a split. For a broader refresher on how negative gearing actually works in the current environment, our guide on negative gearing in Australia is worth a read.
Land tax is another one that catches people out, particularly in New South Wales, where the tax-free threshold gets divided between joint owners rather than applying in full to each person. Depending on what else you each own, that can shrink the benefit more than expected. For the specifics of how the Australian Taxation Office treats joint ownership and rental income splits, the ATO’s guidance on co-ownership of rental property is the authoritative source, and it is worth reading before you finalise your split with your co-buyer.
The Co-Ownership Agreement You Cannot Skip
If there is one document that determines whether a co-buying arrangement survives five years or blows up in eighteen months, it is the co-ownership agreement. And it is the document most people skip because getting it drafted feels like an unnecessary cost on top of an already expensive purchase.
To be honest with you, it is not optional. A proper co-ownership agreement, drafted with a solicitor or conveyancer, should set out:
- Each party’s ownership percentage and how it was calculated
- How ongoing costs are split and what happens if one party misses a payment
- What happens if one owner wants to sell their share, including whether the other owner gets first right of refusal
- How the property will be managed day to day, including who deals with the property manager
- A clear dispute resolution process, so disagreements do not end up as expensive legal action
I have seen deals fall apart not because the property was wrong, but because two people who trusted each other completely never wrote down what happens if one of them wants out. Trust is not a substitute for a written agreement. It is the reason you can afford to write one calmly, before there is any tension to negotiate around.
What Happens When Someone Wants Out
This is the question every co-buyer asks eventually, usually at the worst possible time: a relationship breakdown, a job relocation, a change in financial circumstances. Without a plan, your options are limited and often expensive. One party can buy out the other’s share, assuming they can refinance to cover it. You can sell the whole property and split proceeds according to ownership percentage. Or, in the worst case, one party can force a sale through the courts, which is slow, costly, and damages the relationship permanently.
A good co-ownership agreement addresses this scenario before it ever becomes urgent. Build in a mechanism for buyout valuations, a timeframe for resolving a sale, and an agreed process rather than leaving it to be worked out under pressure. If you are thinking about how an exit fits into your broader strategy as your portfolio grows, our article on scaling your property portfolio past two properties covers how ownership decisions made early can either support or limit your options later.
Frequently Asked Questions
Can two friends get a joint home loan for an investment property in Australia?
Yes. Most major lenders will approve a joint loan application for friends, not just couples or family members, provided both applicants meet the standard serviceability and deposit requirements. Lenders will typically assess both incomes and treat both parties as jointly and severally liable for the full loan, so your co-buyer’s financial position matters as much as your own.
Is tenants in common better than joint tenancy for investment property?
For most family or friend co-buying arrangements, tenants in common is the better fit because it lets each owner hold a defined share that can be sold, willed, or adjusted independently. Joint tenancy suits couples who want their share to automatically pass to the survivor, which is rarely what siblings or friends actually want.
How do you split expenses when co-buying an investment property?
Expenses should generally be split in line with ownership percentage, and this should be documented clearly in your co-ownership agreement rather than tracked informally. Most co-owners set up a joint account for rates, insurance, property management fees, and loan repayments, with each party contributing according to their agreed share.
What happens if my co-buyer wants to sell but I do not?
This scenario should be addressed directly in your co-ownership agreement, ideally with a buyout clause that lets the remaining owner purchase the departing owner’s share at an independently assessed market valuation. Without an agreement in place, resolving this can require legal action, which is slower and more expensive than either party wants.
Key Takeaways: Buying an Investment Property with Family or Friends
- Joint home loans between friends and family have risen sharply in recent years as affordability pressure pushes more Australians toward co-buying as a way into the property market.
- Tenants in common is generally the more suitable ownership structure for family or friend arrangements, because it allows defined, individually controlled shares.
- Ownership percentages should reflect actual financial contribution, including deposit, loan servicing, and ongoing costs, not just a default 50/50 split.
- All co-owners on a loan are jointly and severally liable, meaning you remain responsible for the full repayment even if your co-buyer cannot pay their share.
- Negative gearing and capital gains tax are both split according to ownership percentage, so the way you structure your split has real, ongoing tax consequences.
- A written co-ownership agreement covering costs, management, and exit terms is essential and should be drafted before settlement, not after a disagreement arises.
Buying an Investment Property with Family or Friends: Final Thoughts
Buying an investment property with family or friends is not a shortcut and it is not a compromise either. Done properly, it is a legitimate strategy that gets time-poor professionals and early investors into the property market years sooner than they would manage alone. Done carelessly, it is one of the more expensive lessons you can learn in this industry.
The pattern I see again and again is that the property itself is rarely the problem. People do their due diligence on the suburb, the growth drivers, the numbers. They do not do the same due diligence on the relationship, the structure, and the exit plan. That is where most people come unstuck, and it is entirely avoidable with the right advice up front.
If you are weighing up co-buying with a sibling, a friend, or a partner and you want someone who has been through this exact decision with other investors to help you get the structure, the numbers, and the property itself right from the start, that is exactly the kind of work we do at Property Principles. We are not here to hand you a checklist and wish you luck. We help you find the right investment-grade property and get the ownership decisions around it right the first time.
