Partnership and exit strategy

[David Bulgrin]

I am looking for advice on my situation. Quick background. I’m married with kids. Started working for myself a year and half ago(non real estate related). Wife works with a steady pay check and amazing benefits. My business partner is my father-in-law. He’s around 5 years from retiring from a well paying government job with a pension. We went and bought our first deal September 2018 cash/no loan. I am the only one on the deed. He wanted to just put up some of the money and offer some help with the rehab. No formal agreement was made on a “partnership” agreement and anytime I suggested such he said we’ll figure it out later. The house was a brrrr strategy. As it stands now he has about 80% of the cost into the buy and rehab and I have 20%. I did a lot of the rehab myself but he also did a lot of painting. Labor division would be 75% me 25% him. During the refinance stage my wife and I applied for the loan and since my income could not be included we only were able to pull out 25% Ltv. A little disappointing but it would provide us with money towards another cheap fixer upper or as down payment on a buy and hold. Also this property cash flows very well as it currently stands.

We are under contract right now on a duplex as a buy and hold property. My FIL is going to be the only one on the loan and I was going to cover down payment and closing costs but he’s insisting on covering a portion so I don’t have to basically deplete my current savings. He also has stated that when he retires he would want to transfer the property and loan to my wife and I( and any properties going forward). I know he ultimately wants to help get my wife and I going in real estate investing but he also wants something out of it too and would prefer to be a silent partner on the future.

If more info is needed I’ll be happy to provide it but if anyone has any suggestions on how we could split things going forward that would be great. Also after 2019 tax season I will have two years of self employment to include on future loans.

Thanks

Dave