Structuring a deal with partner

[Bryce Collins]

I am looking for advice on a fair deal structure for my partner and I. I've already been involved in RE and this will be my 4th deal. partner has no knowledge/experience, but would like to piggyback on my deal (and I could use the extra cash). Here are the details:

-50/50 split of cash-to-close and operating costs

-I did all the legwork on the deal and will be covering all property management duties

-Mortgage will only be in my name. Partner is essentially silent money

Instead of note type of structure, partner wants to have % share of free cash flows and equity. In my opinion, a 50/50 share isn't necessarily fair to me. Hopefully some of you have done a similar deal and I can crowdsource a reasonable split. 

Thanks

[Drew Sygit]

If your partner was fronting ALL the money, then a 50/50 partnership might make sense. If they're only bringing the down payment so you can get the mortgage, then you have more risk than they do. Typically then, they would get a percentage of the deal that corresponds to their investment. EXAMPLE: if they fund the 20% down payment, then the split is 80/20 in your favor. 

Of course, he who has the gold makes the rules, so if they insist on 50/50 split and you have no other options, you may be forced to take it or walk from the acquisition.