Looking for a silent partner to help with out of pocket costs

[Robert Iannone]

Hello, my name is Robert, This may have been answered, but I had no luck finding anything.  I have private/hard money lenders I am considering using.  I have been a GC/ contractor for over 30 years in central NJ so I have everything I need as far as the sweat equity portion of the deal. What I am lacking is the initial 20% ish, maybe less,  I need to satisfy the lenders' upfront costs IE: down payment, points, and doc fees. etc.  I am willing to work out a very fair split of the profits at the sale.  If anyone out there does this kind of 100% lending for the whole project that might even work better, but I am not sure that exists. 

Thanks in advance,  hope you guys can help

[Eric M.]

Sure it is quite normal to do a 50/50 JV with one partner putting up all the money. I have done several of those as the money guy. I am certainly not "silent" though. Depends on how much I am needed. If the other partner is competent, I am more than happy to let him do his thing and be pretty darn silent. If I see something that concerns me, I am not going to be silent. I will speak up and protect my money.

To be bluntly honest, it would be a red flag for me that you have not built up and investment funds after 30 yrs as a GC. I know **** happens but it would make me question your business skills and dig deeper. Just being honest. My experience with GC's is they often just cannot manage money/costs. In a JV you need to be very transparent and thorough about documenting your costs so you can get an accurate "profit" number for the split. I have had several situations where I have caught my JV partner (sometimes a GC, sometimes not) sliding in extra expenses from his other jobs or even personal home into our project. To me that is a deal breaker. It is like cheating on a spouse. No trust after that and I am done. If you have an out of state partner it is even more important. If you are willing to be honest and transparent and competent with the budget, you should not have any issues.

Truly your best bet is to find a deal and post the specific numbers and what you are looking for...or take the deal to a local REI meeting and pitch it. If it the deal is legit, you will get lots of interest. Do a few JV's and build some cash and then look for better lenders. Also if you have ANY money to contribute that would help make a partner more comfortable on the initial deals. Doesn't have to be 20% or even 10%. But just putting SOME skin in the game tells us you are less likely to start the project, discover you are in over your head or it won't be profitable and ghost us....which happens a hell of a lot.