Single or Partnership?

[Yuuj V.]

Hey All!

I just had a conversation with a friend (You know where this is going) and he wants to partner up with me in REI.

Our situations are very different. For one, I'm in another country/continent and he's back in MA. He's trustworthy and hungry, just as I am. He has a good job making about $65K/Year and I'm making $100+/Year. He tends to be flamboyant and wants to make moves quickly without methodically thinking them through, where I am a little more slower and pragmatic. (I tried to explain how to analyze a house using the formulas from the book while he spewed numbers, though sorta close, out. But if we did the math, I'm sure he'd be off by quite a lot).

We both have the same ambitions, and Id say the same goals as far as REI is concerned. But he lacks the capital where I have it, but he is willing to do all the foot work as well as putting in capital. We briefly discussed an LLC 50/50, but I told him lets work on capital first. Once we both have $10K in capital ($20K total), we can prove our commitments and start looking. I explained to him we will need a team, not just him and me, but a CPA, Lawyer, Book Keeper and contractors/handymen as well as an agent. He agreed, and I happen to know a few but unsure about their expertise yet.

He suggest we do this under an LLC, so I know he's put thought into this (because I wouldn't have it any other way), and he's constantly looking at properties, so I give him points for motivation. He's a risk taker (just like me), so we are equal in that mentality and he is a trustworthy friend that I've known for about 6 years.

But baby steps first, and the first steps are to get capital raised so we can move forward. I've had a failed venture already with a  friend who bailed when the going got tough and it costed me $20K from my own pocket while a measly $200 of his. So I am now in the mode of never trusting people who don't share the risk with me, though we are still good friends, I am very careful and selective now. Lesson learned!

What are some of your experiences working with friends in REI or even family members? How did you structure deals or the LLC or split the responsibilities? Any lessons learned or pitfalls?