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Updated over 6 years ago on . Most recent reply

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Looking for advice on structuring a financial arrangement.

Posted

Hi,


I'm looking for advice on structuring a financial arrangement with another person.

I was discussing a potential real estate venture with someone I know. I guess I was persuasive because, without me asking, they insisted on giving me money. I was not expecting this and I am not well versed on structuring partnerships. I would appreciate advice on how exactly to put this partnership together. 

This is a flip that would be partially sold with seller financing. With my partner's money, we would pay cash. My hope is to sell the note and recoup the money immediately. But, if I can't, then we would start making a profit after a year or two. My partner needs to recoup any money they put in. We would then split the profits 50/50. My partner understands that there is risk involved. If, for example, the house burns down, they agree that their money would simply be lost. I would not owe them anything. 

The simplest method I can imagine is for all of the monthly payments to go to my partner until they've broken even. After that, the payments could be split between the two of us.

Though...ideally, I'd like to start making some money immediately. What do other investors do? When investment companies take money from private investors, how do they do things? If you were in my shoes, what would you do? 

Also, I suppose this type of contract should be approved by a lawyer. Are there templates online that would allow me to put something together, which I could then present to a lawyer? 

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