Is this a good partnership?

[Daniel J.]

I was recently introduced to a potential partner through my real estate agent. My agent introduced us because he thought we could be mutually beneficial to each other. He was working in oil and gas and lost his job about 2 years ago and has not been able to find any full time work since. He has had upwards of 5 SFH rentals and still holds 2 or 3. He recently finalized a divorce and due to that had to sell one of them, but from that he still holds a good amount of cash for a down payment. Due to not having a full time job though he cannot get a mortgage though he does have good credit. He does also have some credit card debt that he said is not from misspending but still coping with costs from being laid off. I on the other hand have very little capital to play with but I have good credit and a full time job. So the theory is that we could partner and he provide the Capitol and I help the debt to income ratio. Does anyone have any thoughts on the wisdom of pursing a partnership of this kind with someone I really don't know. He would also help provide experience since I have not done a deal yet.

[Bryan O.]

@Daniel J. I don't see a problem with it. Of course, you'll need to cover all your basis and have in writing who does what. You become what is called a "credit partner." As you don't really know him, I would look to create an LLC that spells out exactly who does what, how, equity/pay, and how to exit. Use the LLC to buy the property. Essentially, he invests his money and when the property is purchased you become the personal guarantor on the LLC's loan. Your terms aren't as favorable because it is a commercial loan, but I think this way allows the greatest risk mitigation.