Buying First Rental Property

[Brett Riemensnider]

Hi my name is Brett. I currently own a home that I live in with my family of 3, we have about $80k in equity and our mortgage rate is fixed at 2.62%. I have about $20k I could put into a deal myself of my own money. With only $20k down that doesn’t seem like a large enough amount to go into a deal expecting to cash flow in this market. So my idea was to find a partner to avoid taking out equity.

I have a friend who has been looking to purchase a home but he has been getting cold feet. My goal is to present him with a 50/50 partnership on a small multi family or single family home that he himself will be living in. My benefits being that I have someone occupying one of the units before we even find a deal and we both benefit by adding twice as much money to a down payment on a property.

Now here’s what I’m struggling with. If we were to do that, how would you recommend handling his unit’s payment? On top of that, what does it look like with everything outside of “rent”? Utilities? Parking? Snow removal/lawn care if we went small multi family? Since we are partners and he owns half, would his unit still be expected to pay market rate rent? What would be the best way to go about properly dividing our finances to have a true 50/50 partnership? I want to approach him with a sound business plan that makes sense before we start looking at properties together. Thanks for taking my question.