Problems with my partnership proposal

[Jessica Flint]

I recently approached a good friend about being an private money investor.  I don't have any partners or investors yet. Her and her husband came back and offered being partners instead of only investors.  I thought it over and decided I'd be willing to do it ONLY if we were 50/50 partners.

They were offended that I offered a 50/50 split. They would be the money. My husband and I would do EVERYTHING else! They have ZERO knowledge of our market, how to calculate cash flow, ARV, how to swing a hammer, how to find contractors, resources, how to manage tenants, NOTHING! I"m a real estate agent, have the knowledge in the market. I've been investing in buy and hold RE for a few years, I've done several flip homes and my husband and I know how to do all the work ourselves. Plus I do all my own property management. And I would be waiving commissions on purchases. They don't have that much money, so their investment would be the down payments only. Approximately $30,000 per house. (We buy homes around $100k)

I proposed that they would get their initial investment back, no matter what, if we sold or our partnership dissolved.  We would only split cash flow and any equity gained after the house started cash flowing.  They wouldn't have to lift a finger!

Was this an unrealistic offer?  I've listened to some of Brandon's podcasts and they've mentioned this type of arrangement.  Did I miss something?  Why was this so offensive?  

[Scott Mac]

Hi Jessica,

So find another business partner, and invite your friends out to a fun movie (if your brave enough re COVID).

Tail can't wag the dog (and that goes for both sides of this situation).

Good Luck!