Looking for insight

[Viviane Long]

Hello everyone,

This is my first time posting on BiggerPockets.  I am a fairly new investor (own only 1 rental) and just came upon a nice deal, but wanted some insight from the more experience investors here.
I found a property for sale for $389K that won’t qualify for financing due to its current condition (it looks like the owner started remodeling, ripped the kitchen and bathroom apart, ripped flooring and didn’t finish). The AVR is approx. $530K.  I don’t have the funds to buy this property cash, but a friend of mine is interested in a partnership deal, where he will come up with 70% and I will put in 30% of the purchase price. The rehab money will come from a private lender (family member). Once we rehab the property and refinance to recoup our initial investment (I’d like to turn it into an Airbnb or rent it out), my friend said that the terms will always stay the same 70% / 30%, from any income we get, or if we decide to sell the house. I did mention to him that the split would have to be different since I was the one who found the property and I will be the one doing the legwork to run the Airbnb. 

Oh by the way, my friend is an investor and also a realtor. 

He already reached out to the realtor with a nice pitch, cash offer and the agent gets to represent both seller and buyer for 100% commission. 

My question is, does this sound like a good deal?  Would you accept this deal If you were in my shoes? Is there anything I should be concerned about? 

Any and all inputs are greatly appreciated 😊

[Nathan Gesner]

1. Agents cannot "represent" both sides in a transaction. They are probably representing the Seller and treating you like a customer. Your agent/investor partner should know the difference and it could be significant later on. I'm curious to know why your partner isn't representing you? He's missing out on at least $7,000+ in commission!

2. Splitting based on the percentage of money contributed is easy, but you are correct that there should be some consideration made for the work put in. Some investors charge a fee for finding the deal. I think this is usually a percentage and paid at closing. Then you can negotiate compensation for day-to-day management. That could be an hourly rate, a % of monthly income collected, a flat fee, an increased % upon sale, or whatever you negotiate.

3. At the same time, your deal wouldn't exist if the partner didn't put in the 70% and you are not a professional property manager and shouldn't be paid the same as a pro. Keep that in mind before trying to get too greedy with your numbers.