Structuring partnerships with family

Structuring partnerships with family

Investor · Seattle, WA · Member since 2017 · 34 posts · 16 votes

Hello! 

I know this sort of thing has been asked a million times, but I didn't really find an answer that hit the nail on the head for me. 

I own a property with my dad as a 34 (me)/64 (him) split. I have done 95% of the work, from managing an extensive and extremely complicated remodel, to sitting in city court due to code violations from past owner, to managing the tenants (+10% of rents for this specifically- it's a clean and sober house). However, I quickly realised that if I'm putting in nearly 100% of the work, I should probably own more than the amount of money I put into the deal. 

My question is, how do people structure their partnerships with family (I know there will be more of these deals coming up between both my dad and I and my fiance and I- again, I'll do all of the work)? Any suggestions for smoothly working this out so that it is a little more equal (or is it a loss)? I clearly didn't think about the business management aspect as something that maybe deserves ownership, but after seeing a lot of posts about someone putting in 100% of the cash while the other puts in 100% of the management and they split the deal 50/50, I'm starting to think I kind of screwed myself! 

Thank you.

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  • Self Employed Entrepreneur · Clovis, CA · Member since 2015 · 13 posts · 3 votes
    8y

    Usually I would structure like business like, but since I'm partnering with my dad, I don't mind if I do all the work, his my dad without him I wouldnt be in this world.   

  • Member since 2016 · 13k+ posts · 12k+ votes
    8y

    On a first deal you are cutting your teeth and should leave this one the way it is. I assume you came into the deal with nothing in the way of experience to offer so it makes scenes you get a lower cut till you prove yourself.

    Next time you should be looking at 50/50 if you do 100% of the work with no cash in the deal. If that does not work for him try to part ways amicably. Good luck with that.

    You may want to think about going it alone in the future, family partnerships are fraught with drama.

  • Member since 2022 · 1 post · 0 votes
    4y

    Family partnerships are very complicated. My first thought is why are you doing so much of the management for this property? Is it too costly to hire a property management company to do this? If you could hire an outside company to handle these things, then the cost would be split evenly and you would free up your time. Otherwise, maybe if after getting a price, you approach your dad to say this would cost us each x amount, do you think that I should just continue to handle it for y amount?

  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    4y
    There are several parts to any deal (buy and hold or flip). On the buy and hold, you have the deal sourcing (who found and brought the deal to the table), who managed the rehab, who funded it, who managed the tenants, and who managed the disposition. Not all parts are created equal and the money portion is the largest factor in the deal in my opinion (more than 50%).

    Can you share the financial aspect of this deal? Who put in how much of the total needed?

    On a side note, this is your Dad, I would never consider myself screwed of I did more work than Dad and gave a 50% split! He is my Dad and I hold that sacred over anything!!!!!!!!!!!
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
    4y

    You're having "deal remorse".

    If you had $0 and 0 experience, yet someone was willing to put up their money and trust in you.

    How much of a deal would you giveaway in their position?

    Once you get more experience and a track record, you can start changing the terms of your "deals" that you offer partners.

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