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Updated 5 months ago on . Most recent reply

User Stats

13
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8
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Abigail Lipson
  • Austin, TX
8
Votes |
13
Posts

Sweat equity vs financial equity

Abigail Lipson
  • Austin, TX
Posted

My brother has indicated on multiple occasions an interest in us buying rental properties together - he would be financial equity, I would be sweat equity. I've shied away from this because I'm not sure I want to be in business with a family member but putting that aside for the moment, my question is what is a reasonable equity split. In this case, I've been a real estate investor and property manager for 18 years so I would be the one to find the properties. I'm currently buying properties for myself out of state and hiring property managers - I would plan to do the same here, so my role would not be particularly hard or intense. I would nonetheless be the contact person and primary decision maker with property management and my brother would be largely silent as per his preference. What do you think is a reasonable split to consider in this scenario? 

Most Popular Reply

User Stats

13
Posts
8
Votes
Abigail Lipson
  • Austin, TX
8
Votes |
13
Posts
Abigail Lipson
  • Austin, TX
Replied
Quote from @Adam Bartomeo:

How I have structured these in the past is if he is coming with all of the capital and you are handling everything else than a 50/50 split is fair. You can deploy your capital on a second project and work on both. 


My first thought was 50/50 but since I won't actually be doing all that much, I thought maybe it was too high. But maybe to him it will seem like I'm doing a lot since he's never been a real estate investor. 

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