Terms when working with BP local partners?

[Christopher Laws]

One of the interesting aspects of the recent BP podcast on investing out-of-state with @Mehran Kamari was his partnership with @Dawn Anastasi in Milwaukee. I was wondering, how have other folks found, vetted, and structured similar kinds of partnerships through BP with a remote investor and on the ground management? How do you divide labor? How do you divide the investments and compensation? What about the legal structure?

I am starting to look into remote investing in Atlanta, GA; Columbus, OH; Cleveland, OH; and Jacksonville, FL so I'd be particularly interested to hear of any success stories in those locations.

[Ben G.]

Just last week I was contacted by a new member of BiggerPockets who was marketing for leads in Indianapolis where I'm located.  He asked if I would be interested in partnering on his leads with him.  He has invested a lot of money into direct mail post card marketing.  He is taking action which is great, but he is not confident in getting the deal to closing and finding buyers.  

He made it clear that he wasn't interested in birddogging leads to me for $500 - $1,000, but rather than that, he was interested in learning how to wholesale on his own.  I told him that I'd be willing to partner with him 50-50 on any leads he produced that we turned into deals.  He would do the marketing, and gather information from sellers, and I would be the one to estimate repairs, comp properties, and find buyers.  

He is thrilled to partner with me 50-50 on his leads in exchange for my prior experience and knowledge (albeit I'm still learning myself), and I was thrilled to have someone bringing me leads. 

We close on our first deal this week that will produce a great wholesale fee that we are splitting 50%. We have nothing legal on paper and it is a handshake deal between the both of us.  He's making more money and learning more than he would be as a bird-dog, and I'm able to teach someone along the way, and make money that I might otherwise not have made if I had low balled him with our partnership structure or just offered him a bird-dog fee.