Bringing on a partner

[David Zickafoose]

So I'm just starting off, and I'm looking at a few properties.  I mentioned it to a few friends, and one said she'd be interested in joining the venture for the property.  She lives across the country, and the properties I'm looking at are near me.  So my question is, how have you all structured those deals in the past?  

[Zachary Ray]

Have your real estate attorney draft up an agreement for you and be sure both parties understand the fine print. 

[Joe Villeneuve]

She comes in as a silent cash partner.  You put NO money in (it's much easier if the roles are clearly defined).

If this is to be a flip property, she gets her money back first, then the profits are split based on the agreed % returns for each partner.

Let me add this, she will want more since she put up all the money.  Here's what you so.  List all the roles and responsibilities that need to be done and don't leave anything out.  Then ask her to apply percent returns to each of them.  You'll be amazed just how fast that 70% she started with comes back into reality world...almost.

[David Zickafoose]

So the property is just a rental, not a flip.  How have you all worked that out as far as money goes for repairs of the building after the initial purchase, say in a year from now?  I'm not completely sure if I'll take her on as a partner for this venture, I don't need any additional money to make the deal happen.  

What has your experience been with taking on partners? 

[Anthony Dadlani]

@David Zickafoose There are many ways to structure a JV. We typically agree to a profit split after a reasonable cost of capital is deducted. Best of luck in all your endeavors.