my son the realtor

[Lois Stern]

My son is  new realtor and 23 years old.  We would like to form a partnership to buy and rehab/rent.  I would like an opinion on how to draw up a partnership and how to split profits/income.  I will provide the down payment and take out the loan.  He will [already has begun] find possible properties and scope out the neighborhoods to make sure they are not "sketchy" and place the bids.

I work at the construction dept of a large hospital and have a friend who is a seasoned project manager with a background in building new commercial properties.  He might agree to consult in helping us estimate the work that will need to be done prior to purchase so we can determine if it is going to be a good property for us.

I plan splitting the rent/proceeds w/my son, plus he'll get the realtor commission  [i figure yes, as I would pay it to someone else if he weren't one - but I wonder if there are other thoughts on that]

As for my consultant friend, do I pay him a flat fee [if yes, how much is fair?] OR do I offer 1% of income [rental and sales] to entice him to help with future rehabs]?

Thank you in advance for your thoughts and recommendations!

[Barbara G.]

Well the emphasis here is that he is your son. It is NOT a regular bussiness partnership  Part of this whole thing is you want him to do well and you are helping him do what he wants and you are moving him on his way in life.

Yes of course he should get the commission.  Your first property should be in both your names and that sounds fair to both of you.  You are putting in the money and he will be doing the work.

You ask:

"As for my consultant friend, do I pay him a flat fee [if yes, how much is fair?] OR do I offer 1% of income [rental and sales] to entice him to help with future rehabs]?"

I think about your "consultant friend" that all this is premature.  You certainly should not make any kind of permanent arrangement at this stage.   You don't even have a property that you are considering yet. The property will speak to you and you can do something concerning that first property when you are ready and see what you need.  Your friend is a commercial project manager, he knows commercial construction,  probably not kitchens and baths and small mechanicals.    Your real estate education will be incremental.

You and your son should join a real estate club in your area.  Perhaps different ones from each other?   Also Join a Real Estate Meet Up Group.

Get active on Bigger Pockets.

Read everything on Bigger Pockets along with Real Estate investment Books.  Run your deals by Bigger Pockets, run your deals by your Real Estate and Meet up Groups.  let us know how you and your son are doing.

You are doing the right thing for your son and it will work well for both of you