Partnership Formation

[Phil Workman]

Hello all,

I am in the beginning planning stages of starting a RE partnership with an individual in my area who is 63. He has a portfolio of single fam units (25+) and a few multi fam properties (duplex and an 18 unit apartment). I am looking for some input and guidance from you guys. We had our first serious meeting this morning about the partnership. I am looking to do something "seller financing" related b/c he is wanting to liquidate within 7-10 years. I want to utilize "creativity" so I don't put in any of my own cash. I have sold a few properties with seller financing myself so I know with the right situation it can be effective. I initially wanted to get a deal started on the apartment b/c I ultimately want to do the multi family game. He wanted to get a partnership going on some of his higher end SF properties and move towards a MF unit together. Below is what we both agreed to thus far:

He has one unit in mind that he has a balloon coming up in Aug of this year; we discussed creating an LLC and refinancing the property into the new LLC. He would get the equity he has in the property at that time. Once refinanced, I would get 100% of the cash flows (500-600 per month). He envisions selling it in 3 years. At the time of sale, we would split equity 50/50. The idea is I would stack the cash flows for 3 years and take the equity from the sale and to go put in a multi family unit.

We left the meeting by agreeing I would get him the model we discussed to him and he would go through his portfolio and see what properties we could apply the model to. I feel its a win win... He is getting older and wants someone like myself who is younger and highly motivated that wont give him any problems... I win by not having a huge up front cash investment.

Any guidance would be greatly appreciated!!!