Partnership structure where one side has all the money

[Andy Kurtz]

Greetings to all. I'd like to partner up with a GC on the BRRR method of investing. I have about $200k liquid ready to invest, but can't spell hammer, let alone swing one. My GC, whom I have been friends with most of my life, is eager to begin rehabbing rental properties, but has little money to invest. My question is, what suggestions does the community have for structuring such a partnership, where one party brings the funding/analytics and the other is the boots on the ground with little funding in place? What % of equity is his expertise worth? Thanks for your input.

[Michael Totman]

Get a lawyer first, before you do anything, and talk to a lawyer first. Remember, use a lawyer first. You'll need an ironclad partnership contract, forget about the equity split. Who cares what the split is when this GC starts complaining that he's spending way more time than he thought on rehab and maintenance, that he wants to get paid an hourly rate, and that he has to go work on some other project for his contracting business while leaving your joint deal at a standstill because he "has to eat too."  Make sure you are extremely clear on who has responsibility for every single little thing you can imagine.  Your partnership sounds good right now, and a 50/50 split seems reasonable to you now, but once you actually start living this dream things will change quickly.  And don't forget to be incredibly clear on what steps you'll take if you decide to no longer be partners.