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Updated over 7 years ago,
How to properly structure a partnership
Dear BPers
I am considering to partner up with a friend on purchasing real estate properties. In general, I have perfect credit, low DTI ratio, but very busy with my full-time job. He, on the other hand, is relatively new to the local market, with poor credits but some cash. My question is what are the common ways to structure a partnership like this? One option that I am thinking is to purchase a turnkey property with both of our names on it, with him paying the downpayment, but using my credit to apply for the loan. We will be 50/50 on everything, including the ownership of the property, rental income and equity. Do you think this structure sound reasonable? What are pros and cons for both of us? Do you have any better ways to form a partnership like this?
Thank you!
Lee