Doing deals with Partners for first time

[Martin Guerrero]

Hello fellow investors. I am about to embark in my first JV with 2 or 3 other investors. We are all associates and there is relationship and trust. I brought the deal together and everyone together and everyone is excited. Has anyone had experience in setting up agreements. Is this usually done through an LLC and its operating agreements or just a general contract that is drafted by a lawyer. The property is a 4 plex and would be obtained via seller financing and everyone agrees to split any profits/cashflow equally. What is the best way to move forward where everyone is protected. What is best practice and what have you seen work best for you in the past? Any advice would be greatly appreciated.

[Prashant P.]

The one thing I have learned is that you should outline in your Operating Agreement the specific roles of each partner.  You should outline which partner has the authority to make repairs/purchases and to what dollar amount.  You should also outline who, when and how will add more capital if needed.  When times get tough your partners may be reluctant to put in capital.  

At the beginning you may not consider these things because the deal might look solid.  These things will become important when issues pop up.