Two Part Question Regarding Joint Ventures

[Dustin Beam]

Hello beautiful people of BP,

I have come across a duplex I think could be a very solid deal. It's in a desirable area, with good schools and low crime. It should attract quality tenants. The owner had the property appraised a couple months ago and are selling it $20k below the appraisal number, so instant equity.

Projected Numbers:

Cashflow: $500-600/month

COC Return: 15%

So I know it needs some work. The above projections are based on 20% down and another $20k for repairs. I could could cover the down payment and some of the repairs, but not all. So if I were to do it up right, I would be short some money. There are tenants on both sides, but one is moving. In theory I could keep the other in there, fix one side, and once I gained enough capital, fix the remaining side.

Is this property a prime candidate for a partner?

If you answered yes, how should I go about this? On the one hand, using friends or family could be risky because you wouldn't want business to affect the relationship negatively. On the other hand, starting a long term business relationship with someone you don't know really well has its own built in risks (you might end up hating that person).

I know partners can be great, but I personally don't actually want one if I can avoid it. But, like I always hear on hear, 1/2 of a good deal is better than 100% of no deal.

[John Thedford]

I would find the additional funds needed and do it alone. Partnerships can go wrong at any time. What if they die? What if their spouse files for divorce? What if they are not happy with the return? What if they want to sell and you want to keep it. There are so many possible questions why JV the deal? Whatever you do, if you take in a partner make SURE and have a written agreement agreeing to binding arbitration. That is a LOT cheaper than going to court.