Evaluating a Partnership

[Brian Gallagher]

I am currently evaluating a duplex purchase in the Cleveland area. I feel pretty confident in my evaluation of the property, and think it would be a good candidate for BRRRR: Purchase Price: $130k Rehab Cost:$47k ARV: $225k Monthly Rental Income:$2400 I am currently planning on buying the property with a conventional mortgage and financing the rehab myself. After completion of the rehab, I would not have any cash outside of emergency reserves. After a year of holding the property I would refinance, collect around 40-50k, and buy another one. Over the past month, I have had a friend approach me about going in with me on a property. I have not yet put a proposal together, because frankly I’m not sure what a proposal that would be beneficial to both of us would look like. I would manage/perform all of the rehab, along with managing the tenants. If I am able to do the work with my own cash, am I gaining anything with a partnership, or am I better off doing the deal on my own?

[Todd Dexheimer]

 You need to figure out what your goals are. If you want to build a massive rental portfolio then having strategic partners can be very beneficial. If you just want to buy a handful of rental properties then having a partner would probably be more of a hindrance. It sounds like you do not need a partner to buy a rental property or two so if that was your goal don't partner. If your goal is to do this full-time then you may want to look at partnering. By building partnerships upfront on different investments it will help you expand your network and build your portfolio even faster. You can decide if you want to make this a partner on every single deal or just make it property specific.