First deal as a partnership

[Matthew Fearneley]

Hi BP community,

I’m having trouble structuring a deal between my partner and I. I do not have a lot of taxable income as I’m self employed right now and don’t have 2 years of work. However, my partner has that but is not willing to put only his name on the mortgage as he wants my name on it as well so He doesn’t feel like he will be incurring all of the risk. We have the same mind set for real estate and I want him to be as comfortable and confident in this investment as possible so that we can move on to get our first duplex together. I would take care of the management and marketing of the property and he would supply the finance. I make around $900-1000 bi weekly and he makes more so we know we can afford it if we have any vacancies as all of the expenses for the property come in around 1400/month (our rent coming in would be around 2000). How can I structure this so that I can take 50% of the risk? I should mention I live in Fredericton NB, Canada and that those rough numbers are just a property we walked through. 

Thanks

[Dan Barli]

@Matthew Fearneley is the lender doesn't qualify you to be on the mortgage, there is a risk for your partner to not have you on there. You can have an agreement that is separate from your mortgage where you are equally responsible for the payment. To give him comfort, you can suggest opening a joint bank account. If he is concerned, he needs to understand that you cannot go on the mortgage, but you are equal partners. You can even offer to include a clause that if you default (don't pay your half), then he gets to take your interest after a certain period of time. I would only suggest offering that if you HAVE to in order to get the deal. Otherwise, just try to comfort your partner and keep the strength of the relationship as the reason for splitting it.