as the passive JV partner - getting cold feet, please help!

[Louis Sulek]

Hello everyone,

I'll try to be brief! 

- I met a lady online who was looking for an equity partner in an AirBnB condo. She does all the management etc, I go on title of mortgage and do all the financing, and we split cashflows and sale proceeds down the middle. 

- I negotiated a preferred return upon possible refi or sale

- I was totally ready to do this until my mortgage agent told me I was giving up way too much, too much risk too little reward, she has no skin in the game etc. 

- a conservative projection has us cashflowing 1k a month, so we'd each get 500 

- there's money in the buy - instant equity around 20k

- NOI conservatively 100% after 5 years, so I suppose 50% each, so I suppose 10% / year /each.

- I found a company that has 23 AirBnB rentals in the same city and charges 15-25% of REVENUES ONLY.....

- I have cold feet now. Do I really need a partner? I know the partner would do a better job than the prop management company, but for 25%+ more? Not to mention appreciation - the partner would get half of that too..
- I have no AirBnB experience but believe I could meet with this company and do a decent job of overseeing them overseeing the property.

- what do you think??? back out of partnership??  financing condition is to be removed in a week I must decide very soon 

Please advise!
Thanks in advance

[Jon Allen]

I think the way to do that deal is for you to own 100% of the deal, including appreciation, and for her to be your tenant at an above-market rent. She Airbnb’s it and keeps any excess cash flow. Above market rent is justified by you allowing her to sublet it and the increased risk of lots of different people in the property. And if it’s going well and her take is still above an STR property manager you don’t renew her lease and just run it through them. Without you she doesn’t have a business - not a ton of owners would let her do this - so going 50/50 on everything is too good a deal for her in my opinion.