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Partnership Strategy Advice
Hi Folks!
I am considering a partnership with a young construction worker I trust. He would take out the loan on a multi-family and I would provide the funds for closing and reno as he lives there for 2 years. Has anyone done this type of arrangement before? Outside of the normal partnership risks, what other risks am I overlooking? I was thinking this could be a good strategy to scale and keep costs managable. Thanks in advance for any and all advice!
-Justin
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Just a question, but if you have the funds to buy and renovate, why do you need a partner? It would be much easier and safer for you to do it yourself. If he does not do the work he is supposed to do or do it in the timeframe that was initially anticipated, what happens? It sounds like the house would be in his name; I'm not sure what type of recourse you would have.
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Real Estate Agent Florida (#SL3473500)
- Global Investors Podcast
- https://harborsidepartners.com/commercial-real-estate-podcast/
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Good questions @Charles Carillo, and my motivation with him using it as a primary is the fact that I will be able to put 3.5% down since it will be his primary versus 20% if I finance it as an investment. I do trust this partner very much and feel very comfortable that the outcome will be good no matter how the deal runs because of our relationship. I was considering a 50/50 partnership minus any money invested into the intial purchase or for renovations. Those would be paid back dollar for dollar. Since he doesn't have the capital, but the skills, this gives him entry into this space and seems low risk for me considering if all goes south, I wouldn't lose much. I hope this helps to paint a better picture.
-Justin
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Hi Justin,
Don’t hate me.
I’m just a young fella trying to work out SEO so here I am about to post my website link. If I keep working hard enough, one day I’ll have the funds to invest in property and actually be able join the conversation. But until then, please don’t report this comment, I promise I’m not a spambot.
I don’t know how partnerships work but I understand how wanting a construction worker as your partner can benefit you.
Sell my car Quote from @Justin Skiles:
Hi Folks!
I am considering a partnership with a young construction worker I trust. He would take out the loan on a multi-family and I would provide the funds for closing and reno as he lives there for 2 years. Has anyone done this type of arrangement before? Outside of the normal partnership risks, what other risks am I overlooking? I was thinking this could be a good strategy to scale and keep costs managable. Thanks in advance for any and all advice!
-Justin
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Quote from @Justin Skiles:
Hi Folks!
I am considering a partnership with a young construction worker I trust. He would take out the loan on a multi-family and I would provide the funds for closing and reno as he lives there for 2 years. Has anyone done this type of arrangement before? Outside of the normal partnership risks, what other risks am I overlooking? I was thinking this could be a good strategy to scale and keep costs managable. Thanks in advance for any and all advice!
-Justin
You may want to talk to a Mortgage Loan Officer (MLO) to make sure a "partnership", a legal entity, is acceptable on an FHA Multi-Family loan. I deduced this type of loan from the "3.5% down" comment. My guess is that the arrangement you contemplate would not meet FHA underwriting guidelines, but I am not a MLO and have not had a conventional or FHA loan in decades. I just know that most federally subsidized loan programs lend to people (humans), not partnerships, LLCs, or corporations.