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Updated over 10 years ago on . Most recent reply

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123
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Josh Sterling
  • Property Manager
  • Wyandotte, MI
26
Votes |
123
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How would you structure this partnership?

Josh Sterling
  • Property Manager
  • Wyandotte, MI
Posted

We have 2 investors. Investor 'A' and investor 'B'. They live on opposite sides of the country, but have connected through the magic of BP and a partnership may be born.

They plan to pay cash to purchase long term buy and hold properties.

The properties will be located in investor A's market due to the cash flow opportunities. He already has a good size portfolio (50+ units) and a management company in place. Investor A will also be in charge of finding the properties to purchase, managing the rehab, placing the tenant and then managing the property going forward based on the systems he already has in place.

Investor B will visit at least once a year and keep an overview of the investments, as he also has the experience of owning 10+ rental properties. However his general goal will be "Mail Box Money"

Both investors have the cash available to purchase multiple properties.

How would you structure this fairly?

How much should each person own and how much should each person contribute?

If they each contribute 50% of the purchase/rehab money, how much should investor A get for his role of finding the deal, managing the rehab, and managing the property.

I realize that it is ultimately up to both partners to decide what is fair and create a win win situation, just looking for input, experience or suggestions from the BP community.

Thanks,

Josh

Most Popular Reply

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Jay Hinrichs
#1 All Forums Contributor
  • Lender
  • Lake Oswego OR Summerlin, NV
62,860
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42,688
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Jay Hinrichs
#1 All Forums Contributor
  • Lender
  • Lake Oswego OR Summerlin, NV
Replied

If your putting up 50% of the money and finding the deals and doing all the leg work and the other investor is simply putting in 50% of the cash and getting "mailbox money" that's a great deal for him,  the only benefit I would see to that structure for you is if there is a huge opportunity to build scale and mass and you need the capital..

In my mind If I was providing all the opportunity and doing the day to day I would want the investor to fund 90% to 100% of the deal and we split 50/50... Lots of work buying rehabbing and renting these homes.. Far more work than those that have never done it understand.

From investors B's position he or she probably wants to know you have skin in the game.. So maybe you put in 10% into each deal.

Also if you have this going on for you where you have wherewithal and experience and a portfolio you should be talking to B2R about financing 500k at a time for you.. super terms and you don't need equity partners.

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JLH Capital Partners

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