Looking for Partnership Structure Ideas

[Eric Hempler]

It probably depends on the deal, but I wanted to get a better idea of how I might want to structure a partnership on a purchase. 

I'm also looking for some resources if you have recommendations. 

How this started was I was looking at the idea of starting a syndication. Then as I was moving along looking at things I thought about a partnership instead. 

I think for the most part I would be borrowing funds for the down payment. 

I could charge an acquisition fee to find the property, which I would use to pay for the closing costs, and then an asset management fee. The asset management fee might be my only monthly income and the cash flow would be 100% for the investors. So they would have a cash-on-cash return in the case. That's about as far as I got with the idea since I"m not sure how I would split the cash flow, if at all. 

I would probably refer out the property management so I can focus on finding more deals. 

My background is in accounting for the past 20 years at real estate companies, I've done some property management and appraised apartments. 

Looking for some ideas I should think about or maybe some resources I should look at.

Thanks

[Evan Polaski]

@Eric Hempler, first I feel like you need to run a cash flow projection for your own personal position.  An acquisition fee is collected at closing of the deal, so you can't exactly use it to "pay your closing costs", since many "closing costs" need to be prior to acquisition.  And if you are raising money, you aren't borrowing the down payment, but even that money is not likely to be flowing in until you have already racked up a reasonable amount of out of pocket expenses.

Then onto Taylor's comments. A partnership or JV is only viable if the partners have an active roll. I was explained that active can be fairly subjective and doesn't mean your partners need to be on site all day every day. But typically it involves more than most syndicators are willing to give up.

At the end of the day, a structure and split can take thousands of forms, with different hurdles, splits, fees, etc.  At a high level, you need to make sure you are taking enough to make it worth your while, without taking so much you can't realistically hit return levels your investors would be expecting.  Directly reaching out to people in the industry can very much help.  Brokers are commonly investors in deals.  Attorneys, other investors, etc.