Silent Partnership structures and agreement examples

[Tabetha Sibley-Tyner]

I have a real estate investor that wants to be a silent partner with me. He wants to put up the money and I will handle all of the rehab, listing it(I am real estate broker), etc.  My question is how do I structure this between the two of us so that way we both protected? Second question is does anyone have an example of an agreement that we would sign that would outline our split, costs, etc? Thanks for your help.  

[Aaron Pfeffer]

There is a law firm here in SoCal: Geraci Law Firm that specializes in such documents, so you could perhaps Google and call them for a local peer recommendation, or perhaps they will be able to help you in Florida as well.  $1500 does not sound steep to me, as long as the document being created is all-inclusive and intelligently crafted.  There are a few ways to go about your agreement, and you and your investor need to think about who wants the liability of the project itself.  Meaning, is your investor willing to share in that liability and be a member or even a guarantor of an entity you create together?  Or would they rather act as a lender to you and put a lien on the property to protect their investment?  The good news is at the end of the day it is not a terrible complicated endeavor, but it does demand very specific language that should leave no questions for either party.  You'll want to think about if the investor is giving all the money up front, or giving you some up front or the rest in draws, or if you are doing the work out of your own pocket and then being reimbursed in draws by the investor.  You'll want to think about if more money may be needed down the road and who would end up paying for that.  The investor may also want "floor" of what they need to make on their money regardless of what you expect to make if the project does not garner your expected profit. I'd reach out Geraci.  Good luck with it!