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Updated almost 9 years ago on . Most recent reply

User Stats

13
Posts
5
Votes
Tim Slatt
  • Real Estate Investor
  • East Bridgewater, MA
5
Votes |
13
Posts

Unusual partnership proposal

Tim Slatt
  • Real Estate Investor
  • East Bridgewater, MA
Posted

One of my good friends has been hearing me talk about rental properties in my area of interest (Fall River, MA 02723).  He just brought me into his office (we work together) and told me he's about to come into some money and would be interested in setting up a real estate partnership, but the terms sounded a bit unusual.  I can't tell if I'm on the good or the bad side of it.  Here it is in a nutshell:

  • He puts up all the money to buy the property in cash and fund any repairs (in this example we'll use $50,000)
  • His wife (a real estate agent) helps find the deal and does the bookkeeping
  • We split any renovation work not done by a contractor 50/50
  • I am responsible for paying him back $25k, which would come from my half of any cash flow.  My equity stake in the property would be increased by a small percentage with each dollar I buy in.
  • He reserves the right to sell the property, at which point any of his remaining funds owed by me comes out of our profit and we split the remainder.

Obviously it's not a loan, and it's not a typical 50/50 partnership, it seems to be something in between.  From what I can tell the "interest"in the property comes in the form of my lack of initial equity.  

Any thoughts on the matter?  Anything that's staring me in the face that I'm missing?  I'm sure there is.

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