Forming a Deal With a Partner (my dad)

[Jack Sorenson]

I am making the big leap this year to get my first piece of real estate and words cannot describe how excited I am. I’m 23, just graduated college and ready to get the ball rolling. Currently I am preapproved for a mortgage and working with an agent. Game plan is to house hack a single family and rent out rooms. All that is left is making offers but I am receiving some capital from my father to cover closing costs. I know I can potentially work a deal out with a seller to have them cover some of it but I want my offer to be as attractive as possible.

So now I am at a crossroads between how I should form the deal with my father. Do I give him a percentage of equity? Treat it as it’s own loan and place an interest on it? Offer a portion of cash flow? Would you rather give up some equity but keep the cash flow? Or the other way around? Just curious what people have done that is successful and attractive to the partner.

[Andrew Krouse]

Jack,

This is a great question. I feel like I am in your boat as well. Our situations are very similar. I would love for someone to share some insight on this for us.