SFH or New Build for first "purchase"....thoughts?

[Bo A Vanecko]

I have mentioned in a previous post that i have an investor (current consultant at company i work for in CO) in Texas interested in helping me secure my first purchase(s) in the Fort Worth are (C class homes in areas that likely have gentrification happening).  He has a company set up and his wife is a real estate professional and they are basically doing much of the leg work to pick a good deal for me and in return have offered up a 6% management fee to manage these OOS properties. 

As i have narrowed in on a few homes, another item has come to the table that is definitely interesting.  Here are the two options i am currently presented with:

1) buy one or two SFH's with the capital i currently have and get around 15-20% (or better) CoC returns on these and around 300-500 cash flow monthly

2)  Go in on partnering with this colleague / investor on some new builds:  

--> background is he purchase 10 lots of land in various areas of FW at substantial discounts to their current value. he can now build on these and a finished product could easily see 400-600 cash flow and 25-35% CoC

-->  he has his eyes on about 5-10 other lands and wants to free up his capital on these lots and also has lined up new construction loans as well

So the question is, would it be better in the beginning to utilize my capital in one or two SFH's now or potentially go in on three new builds where the risks are obviously on the length to build etc and no cash flow until rented out etc?

the other question is are there any recommendations on lawyer to help me set up a contract for these partnerships (i am assuming some type of LLC or LP type arrangement)?

would love to hear peoples thoughts on either option :)  

as a long term goal, we are looking to get these homes going and either keeping or selling interest in them down the line as we want to begin buying larger multi-plex units (nearly scored a 20 unit recently but the owner would not budge on price and the price did not quite make sense).