How do I structure a partnership?

[Michael Faudoa]

Hello all, I have a basic question about partnerships. I have grown my knowledge on real estate enough to the point that I feel ready to make a deal. However, I have no money. My friend has no knowledge in real estate but loves and trusts what I’m trying to make happen. He has enough for a 25% down payment on a lot of properties that we are looking at. We are just completely unsure how to structure a deal where we both benefit. He doesn’t have enough to purchase the property outright, only enough for a 25% down payment. How can we combine forces and use my knowledge with his cash??

[Account Closed]

Originally posted by @Michael Faudoa:

Hello all, I have a basic question about partnerships. I have grown my knowledge on real estate enough to the point that I feel ready to make a deal. However, I have no money. My friend has no knowledge in real estate but loves and trusts what I’m trying to make happen. He has enough for a 25% down payment on a lot of properties that we are looking at. We are just completely unsure how to structure a deal where we both benefit. He doesn’t have enough to purchase the property outright, only enough for a 25% down payment. How can we combine forces and use my knowledge with his cash??

 You might want to consider forming a Joint Venture instead of a partnership. It will be far easier to invest and do taxes and handle future decisions. One of you provides the Capital and the other can provide the knowledge and management. If he has enough for 25% down on houses in California, he certainly has enough to spend an hour with a real estate attorney and have the attorney draw up the proper papers. Don't go cheap on the paperwork, it's too big of an investment to get it wrong.