Partnerships

[Dominic L.]

Hi,

I currently own two investment properties in the Bay Area. I would like to sell one, which I own outright, and use the cash for down-payments on several more investment properties. I have an 800+ credit score, but limited income. I've been talking with folks about the prospect of partnering up -- I put in the down-payment money (or most of it) -- and they help me/us qualify for the mortgages necessary to purchase the additional investment properties. 

However I'm unsure how to structure the partnership, in terms of splitting cash flow / appreciation / etc. Thoughts appreciated!

D

[Jeff Pollack]

Hey @D lux,

You can pretty much structure this partnership any way you like as long as you and your partner agree to the terms (e.g. how to split cash flow, appreciation, etc).  If you are literally bring all the cash and they are just a vehicle by which you may obtain a conventional mortgage you should get the majority of the proceeds.  Make sure you build into the partnership that you will revisit every few years in terms of exit strategy. Specifically, make sure you schedule re-examination of the deal to determine if you hold or sell.  Are you planning to do a 1031 exchange out of one of your current properties and into these new ones? 

But let me ask you this.  are you certain you can't get a loan on your own?  Have you spoken to investor friendly mortgage brokers and not just traditional lenders like Wells Fargo, BofA, etc?  Ping me via PM if you like.  Depending on your situation and pending more info I may know some folks who can help you achieve your goals.     

Cheers,

Jeff