Financial Partnership Question

[Matt Morgan]

Wondering if anybody had experience with using a financial partner on sfr's? I'm getting ready to approach a few investors that have shown interest in financing the purchase of a few more sfr's to help expand my portfolio. I will be doing the management, but I won't have any money in the initial purchase. My question is what would a deal look like if the goal was to buy the rental from the investor 5 years later? Should it be a reduced price to take my management time in consideration?

[Jessica Zolotorofe]

Yes! Or better yet, since you don't know what the market will look like in a few years, you have a few options: (1) you could form an LLC where you are both members and you get an interest based on the value of your contribution, i.e. finding the property, managing it, etc. with a buyout right after the 5 yrs; (2) You can just own the property in your own (or your own LLC's) name and use the investor strictly as a lender, pay them interest or P&I monthly and balloon upon sale, just like a conventional lender, or (3) if the investor wants ownership, you can either take a salary as manager and just have an option to purchase in 5 years, or a right of first option/refusal if they want to sell before then. Lots of ways to structure depending on the investor, and their needs.