Partnerships, Work Load, & Contributions

[Diego Hernandez]

What are some of the roles that need to be divided in a partnership to try split the work load 50/50?

For example, analyzing, marketing, researching, negotiating, RE licenses. . . What else am I missing? What is a good and fair way to share the load?

[Justin R.]

@Diego Hernandez I partner on most projects - I've always separated equity payouts from compensation for time.  Meaning, for example, whoever finds the property gets 2% of the value in compensation.  Whoever guarantees the loan gets 3% as compensation.  If someone provides their own capital instead of a loan, they get market rates for their money.  If there's entitlement, that person takes 10% of those costs to oversee that process.  If there's construction management, that person takes 10% of costs for that.  If someone handles the sale (or they're an agent), they take 2% for that.  If someone property manages tenants, they take 6%.  You get the idea.

Then, think about how much overall value and expertise and risk each person is providing and split the equity based on that.

For me, the important thing is to structure it so that there are project-level expenses that accurately reflect what it would cost to hire someone to do that.  That gives an accurate idea of what's fair and sustainable for a true business.