Partnering w/ Parents...thoughts / suggestions

[Bryan C.]

I am looking for your feedback on this one....my parents are interested in getting into real estate and are open to partnering with me. I know my parents are tired of their jobs and want to find another way to build income. 

They currently dont have any cash to invest, but they have great great credit scores. I would love to help them and partner on something that benefits both of us. Just want to hear suggestions on what everyone would or could do to get the ball going?

[JR T.]

They need to be willing to lose their personal credit. I'd put this in bold type at the top of the partner agreement and again right above where they sign.

Since you have experience flipping you could use their prime credit to get better loans for that purpose. Get a pre approvalike so you know what you're working with and start bringing them deals.

Treat them patiently and professionally as you would an outside investor. Tell them all the facts about a deal and listen to their ideas or suggestions. Always be respectful of their investor veto and accept a no on a deal. Listen to where they think problems are, look into those things. If you can address them in a logical way that fits with the original plan fine. Do not sell them an idea, overcome objections  on the spot, etc. You never want your family to feel like they didn't really like a deal and you talked them into it.

I'd offer them 50% of the net profit per deal. Their loans secured as first position deeds of trust. I'd tell them during your pitch that you are going to want an administrator fee from the 2nd deal on to offset your hard expenses sourcing and servicing the deals 2500-5k that would count as expenses off the top. Track your costs and time looking for family deals and follow through on it even if you each make 20k your first deal. If you eventually grow it those costs get high and partners aren't as open to it down the road.

Good luck!