Partners/friends/investors in real estate

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Partners/friends/investors in real estate

Joshua Garcia
Rental Property Investor · Los Angeles, CA · Member since 2020 · 15 posts · 2 votes

Hey ! So I became a landlord when I was 19. Bought a triplex in LA house hacked that. Then. Duplex. House hacked that. Then a deal fell through and kind of scared me. Now I’m back in the space of getting rocking again. I have a few friends who’ve seen my entrepreneurial spirit and look to me for advice. They want to invest with me. I don’t have enough money to invest yet. How can I structure fair deal where I do the work and they do the money? Is it fair to get a 50/50 return if I put in no money ? 70/30 ? 60/40? I have 3/4 friends with anywhere between 25k-100k.

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  • Tyler GibsonBusiness Member
    Real Estate Agent · Orlando, FL · Member since 2017 · 1k+ posts · 2k+ votes
    6y

    @Joshua Garcia I assume you like these people? Doing business with friends and family can be tricky. There is risk in this game. Hopefully you mitigate as much as possible but there is still risk. Best advice I can give you is have an honest conversation with your friends. Share with them all the good things about Real estate and then share all the bad, all the risk. I know that many investors including myself talk about all the successes we have had and gloss over the risks, failures and heartbreak in between the wins. Don't sugar coat it and then be honest with them about the split. If you think you deserve 50% say so and then negotiate. Above all make sure everyone is on the same page and happy with the agreement then put it in writing. Have everyone sign the written agreement then give everyone a copy for their own records so no one can forget if they get 40% or 50%. 

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  • Calvin OzanickBusiness Member
    Property Manager · Janesville, WI · Member since 2017 · 707 posts · 297 votes
    6y

    If you feel that you are worth the 50% split then ask for it. Doing the work is a major job which is nothing to scoff at. It is just a matter of you and your partner clearly communicating what roles lie where. Be sure you work with a lawyer to draft up a partnership agreement to make sure everyone is covered in the event of a messy break up. 

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  • Joshua Garcia
    OP
    Rental Property Investor · Los Angeles, CA · Member since 2020 · 15 posts · 2 votes
    6y

    @Tyler Gibson yea, I like them. I initially was looking to put 50% of the finances down and do the work but compared to their experience , I would be doing allll of the work. I think that should drop my financial input. I’ll weigh it depending on the deal. A contract is a great suggestion. I wouldn’t make A deal with my money if i didn’t think it would be successful but there are ALWAYS risks. I don’t want to take advantage of their trust in my experience or lack there of.

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  • Joshua Garcia
    OP
    Rental Property Investor · Los Angeles, CA · Member since 2020 · 15 posts · 2 votes
    6y

    @Calvin Ozanick yes. Laying everything out is crucial. Considering my situation I would be okay with a 60-40 split in financial investment and I make up the other 10% with my finding and working the deal.

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