Structuring a commercial deal partnership: Trading my time

[Rimes Dinkins]

Hey guys, I am currently a real estate agent and looking to invest in commercial properties. As many of you know commercial deals can require a lot more capital and certain deals have limits on wealth and income (accredited investors).  As an agent, I have experience in transactions, market analysis, project management, and property management, but can't act on buying a commercial property alone at this point in time.

Have any of you structured a deal by putting low to no money down in a commercial deal and used your expertise, experience, and time to get in a deal?  If so, how did you structure it? Or if you are the investor with the capital, what are your thoughts on this? What's reasonable? I would act as the General Partner doing property management (trading my time for money).

[Joseph Cornwell]

@Rimes Dinkins

I have done a few partnerships, on midsized multifamily deals where my partners brought all or most of the capital to the deal. I found the deal, navigated to closing (I am the buyer broker), and then GC'd all of the renovations and turnovers, I also managed the properties, I do lease ups, marketing, etc. I am an agent, and I own a GC company here in Cincinnati as well. Depending on the deal size, cash flow, equity potential, etc. I have taken 40-50% ownership for these responsibilities (the larger the deal, the less % I need for it to make sense). I do all of my end at costs, no salary or profits (I am paid through cashflow and equity on the back end), so after these properties are completely turned over I typically have "invested" close to the original passive money partner. The passive partner still typically gets 10-20% CoC returns during the rehab period, and then we usually do a cash out REFI after 3 years or so and all or most of the initial capital is returned because I focus on major value add BRRRR deals. They then get to keep their original ownership after the REFI and see infinite returns after they get their capital back. There are countless ways to structure these partnerships, but if you are finding legit deals, and adding enough value/experience for it to make sense, finding the money partners is very easy. By aligning your interest to theirs or putting their interest first, and making sure you only profit when they do, it makes passive partners eager to partner with you. Obviously, do not give up so much that you aren't motivated to actually manage the deal though. If you are good, you are providing an opportunity for them, not the other way around. Deals and good operators are very difficult to find, money is not, don't forget that! Feel free to connect if you have any other specific questions, good luck!