House hacking and Partnerships

[Tanner Stoddard]

Hello everybody! New to Pro and somewhat new to the forums! Listening to the podcast for a little while so I have some idea but still haven't invested.

So I have some questions about my first deal. I will be house hacking and my wife and I will be living in one room and renting out 3 or 4 others.

I will be partnering with my brother in law on the deal. Wondering about the money side of it.

Here's what I think.

I have great credit and I will be the one finding the deal and running all the numbers to ensure that we can make it cash flow. He will be bringing a larger income and the down payment for the property. We will go in as co-borrowers and will have a 50/50 equal partnership on the ownership of the home. When it cash flows the amount will be split in half and half for me and half for him. Same with equity minus the down payment he brought. The biggest question I have is, should I be paying him extra like a 10% on the total of the down payment? Similar to a hard money lender? Or since he has equity in the property and ownership just let that be enough.

Total Equity - His down payment and then equity leftover split 50/50.

Example- 400k house 20k down 380k Loan

Hypothetical in 5 years we have 40k equity or so he would then get 20k for his down and half of the remaining 20k. He would get 30k and I would get 10k.

Plus paying him 10% interest on the amount he puts down?

Does that seem fair or like a bad idea? Or does 50/50 and the equation I put above make the most sense?

Thanks for any and all help and ideas!