Partnerships & Profit - Incentive for the Partner

[David DeRuyter]

Hello All,

I'm new to the scene and have the same problem a lot of new investors have... I have no capital to start out with. I was originally thinking about wholesaling in my area to raise cash, but have read some interesting articles about brokering without a license, and I'm not sure that what I had in mind is technically legal since I can't actually purchase the property before assigning it, or reselling it. That being the case, I want to partner with other investors or friends of the family that have the capital I am lacking. Here's the question I have - if I'm splitting a deal with a partner, what is the real incentive for them since the cash on cash return wouldn't be great after having to split the profit? 

For example - I have a triplex that costs $235,000 that after running the numbers would give me a 13% cash on cash return and cash flow for $575/month. That is assuming a down payment of 20% and closing costs totaling $52,000 due at closing. If I want to do this deal, I would approach a partner for the $52,000 needed to do the deal and then split the profits 50/50... giving us each  $287/month in cash flow. That is only 6.6% cash on cash return for that partner. Great for me since I have no cash invested, but I don't feel like that would be very appealing to a fellow investor... does anyone have any advice on how to make the deal sweeter for a partner? Maybe a different way to approach it? Any advice is greatly appreciated!