Investor · Philadelphia, PA · Member since 2021 · 64 posts · 12 votes
2y
@Zachary Ware Sorry I removed the content while attempting to delete the whole post because I felt it would be more relevant in another forum category.
Investor · Philadelphia, PA · Member since 2021 · 64 posts · 12 votes
2y
@Zachary Ware
Here’s the original post:
So my mother is retired and my father is just about ready to retire. They have had great careers and have sold my childhood home, bought a condo that they plan on moving into abroad and hope to by another home in the Philadelphia area so they can come back every now and then to be close to their kids and grandkids. They have mentioned that they'd like to make it a rental so that it can generate money while they are not staying there the majority of the time and l've suggested turning it into a furnished mid-term rental and to target traveling nurses or companies that provide extended stays to families whose homes are under construction.
One thing I don't have much experience in is structuring partner deals. I personally was hoping to do the heavy lifting when it comes to reno and potentially management while they were to provide the down payment. I know there's a lot to learn about structuring deals but would love to get some initial suggestions on how to best do that. Should I do 50/50 equity where I find the deal and renovate/manage while they put down the down payment? Would love some suggestions.
Investor · Philadelphia · Member since 2023 · 104 posts · 46 votes
2y
It really comes down to your relationship with your parents and how you guys internally negotiate the split..
I have seen some investors break the work down into categories with their own weight. For example:
25% Sourcing the deal 25% Funding the deal 25% Rehab / Managing work 25% Sourcing tenant and managing property
Obviously all of those figures can be weighted differently according to what you guys determine their value to be. But I think that if you break it down into each action of responsibility, and determine their value, you will be able to come up with proper splitting of profits and equity.
If you need any help with sourcing a property, i sent you a request to connect.
As Christopher said, the structure really depends on you and your parents' goals and what you want out of the deal. If it were me, and my parents bought the property(put up the down payment/reno funds, etc), I would not take equity but would ask for a % of the rental income for management. I would also charge a flat fee or hourly for the renovations. But again, this is family so maybe you both want to split everything down the middle and have a 50/50 split of the equity and 50/50 split of the revenue.
Rental Property Investor · Member since 2023 · 1k+ posts · 922 votes
2y
If your parents want the property available when they travel you should make it a STR. This way they can block off the dates they wish to use the property in the calendar and it will be available to them. MTR's will often tie up the premises for 6 months or more so it wouldn't seem to align with their goals.