Using a partners personal excellent credit to receive funding.

[Art Z. A.]

Hi all,

I am stuck in this situation. Due to my bad personal credit. I am seeking in bringing in a partner to use his/her excellent credit to apply and get funding for acquiring properties. I already set up a LLC. My question(s) is how do I go about doing it? How would the wordage be on the contract and I am sure a partnership agreement/contract needs to be generated and I don't want to use a contract attorney due to limited funding. Your input will be greatly appreciated.

[John Giamundo]

I know I'm a newbie but I am a lawyer. I have to say a partnership agreement is THE defining agreement that protects you, your partner, and delineates all responsibilites of the parties, including what to do when you cant agree on things, and what happens when you want to break up the partnership. There is no way I would cheap out on this. Its not worth it in my opinion. Invest in the Lawyer.

[Art Z. A.]

Thanks for responding...I see. All I need is to used his/her excellent credit, apply for funding receive funds, acquire property, sell then he/she gets a predetermined percentage.

How much would this typically set me back if I were to go with an attorney? I am in Chicago and I see you're out in NYC so what would you charge hypothetically?

[Marco Santarelli]

Hi Arturo (art) z. A.,

Welcome to BiggerPockets!

John Giamundo is right. This is a critical document and you MUST have everything in writing before you get started. Disagreements and/or issues will come up at some point, and this will be the bible you go back too.

Remember: "The hardest ship to sail is a partnership!"

Continued success!

[John Giamundo]

It would be hard for me to give you a ballpark figure to go with because i'm not in your area, and have no legal contacts there. However, I would point out to you that you should just make sure that whoever you go with specializes in structuring businesses, or at least actively practices in that area. You definitely don't want to pick up the personal injury attorney who will do this one on the side. You want someone who can properly advise you in the areas you need it. Best thing to do is make some calls, or check some websites and look at the areas of practice. See if you can get a feel for it. When you find one you are comfortable with, call them up and ask them for a range that they may charge for this service.

[Steven Hamilton II]

Arturo (art) z. A.,

An attorney can often only cost you a couple hundred dollars and is WELL worth it. I had a client in NC who their investment was split and changing year by year until it hit 50%. The agreement did not stipulate anything if a sale happened prior to being 50% partners. A sale did happen which based upon the agreement would have caused one partner to receive 90% of the proceeds as opposed to it being split 50/50. They have a great relationship so the partner who despite being entitled to more opted to say why dont we amend this to upon sale being 50/50. Imagine if one partner wasn't that nice.

Now, That said I will grill you just as though I was interviewing you:

Do you really think I would want to risk my perfect credit on someone I barely know? Not to mention the fact that my credit is needed in order to get the investment. Typically this type of arrangement is 50/50. I, as a potential investor ask the question, Why? Why do you need my credit? What happened to yours. etc. Be prepared to answer those questions I also want to know every detail, see a business plan that shows all of the numbers.

-Steven