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Updated almost 6 years ago, 02/07/2019
business partner agreement
Hi, my brother and I are new to investing. What kind of partnership form should we be looking at? Is there templates somewhere to look at?
You should call a real estate attorney for the best advice on this subject.
I am guessing a standard LLC where you are both 50/50. Make sure you also put together a resolution agreement if/when you both decide to not be partners anymore.
Good luck
- Curt Davis
Thank you Curt
I am not sure I agree with the "hiring an attorney" thing. At this point I'm guessing you're focus and goals are to make money. Are you looking for something for business in general or are you looking for something per house?
I have a simple 1 page document I use with family. And I have a 17 page attorney document that I use with non-family. The issues are similar, but the level of detail grows the bigger and broader you get.
Here's a few things to make sure are included:
FORMATION
MEMBERSHIP
CAPITAL ACCOUNTS
ALLOCATION OF PROFITS, LOSSES AND DISTRIBUTIONS
MANAGEMENT
TRANSFER AND ASSIGINMENT OF LLC INTERESTS
BOOKS AND RECORDS
TAXATION
TERMINATION AND DISSOLUTION
AMENDMENTS
PM me and I'll connect you with the docs I use.
Originally posted by @Kris Haskins:
I am not sure I agree with the "hiring an attorney" thing. At this point I'm guessing you're focus and goals are to make money. Are you looking for something for business in general or are you looking for something per house?
We are looking for business in general
Originally posted by @Curtis Bidwell:
I have a simple 1 page document I use with family. And I have a 17 page attorney document that I use with non-family. The issues are similar, but the level of detail grows the bigger and broader you get.
Here's a few things to make sure are included:
FORMATION
MEMBERSHIP
CAPITAL ACCOUNTS
ALLOCATION OF PROFITS, LOSSES AND DISTRIBUTIONS
MANAGEMENT
TRANSFER AND ASSIGINMENT OF LLC INTERESTS
BOOKS AND RECORDS
TAXATION
TERMINATION AND DISSOLUTION
AMENDMENTS
PM me and I'll connect you with the docs I use.
Great info, thank you
Originally posted by @Chris Fethke:
Hi, my brother and I are new to investing. What kind of partnership form should we be looking at? Is there templates somewhere to look at?
Chris,
I can only speak to Wholesaling Houses.
Premature Partnering is the #2 Deadly Sin of Wholesaling.
The theory of "I'm good at this and they're good at that so I'll do this and they'll do that" destroys so many newbies businesses before they even get started.
Wholesaling is a business that you can (very quickly) create to be a servant to you and a servant cannot have two masters.
No matter what your hurdle is i.e. Time, Money, Resources, Knowledge, Connections, Technology, Personality (for those who are shy), etc. Try to overcome them without a partner and your business will be strong rather than dependent.
I have seen this so many times; husband and wife, friends, siblings, father/son. On paper it sounds great but it reality giving away 50% of the cash flow and profit you need to automate and scale your business for services you really do not need in the first place can be very detrimental to your short-term and long-term success.
Consider building businesses in parallel with your brother, might be more fun and profitable and less frustrating.
To Great Adventures,
Tom Krol
I would think a family partnership would need the longer document. In my last partnership, my partner did not believe in 50/50. He insisted that there be a clear decision maker when there is an impasse and made me a 51% partner.
Also all of my partnership agreements have a buyout clause. If one partner wants to buy out the other, they present a written offer. The receiving partner then has the option to buy out the initiator at that same price. This alleviates the buyout price arguments.
@Curtis Bidwell - I just sent you a message.