How to structure a partnership on a buy and hold deal

[Tim Freeze]

Hi BP , 

This my first post on the forums. I'm looking at triplex and want to use a partner on the down payment. Rehab rent refi, in six months and return his money to him with a good ROI for him. If I can make the numbers work, how do we structure the partnership for a scenario like this? Thanks BP Community.

[Joshua Fulenwider]

@Tim Freeze do you have an investor lined up already?  If so, talk to them about what they want.  They may have a way that they want to structure the deal.

Two options come to mind immediately for me. First would be to set up an LLC with the partner and in your operating address how they are to be repaid and bought out of the LLC. This would be as an equity investor.

The second option be to have the partner lend you the money and secure their interest in the property with a second mortgage.  In this scenario they would be a debt investor.  They would have less say in the property but when you go to refinance or sell in most instances they would automatically be set up to get paid off.

There are a lot of other creative ways you could probably do this, but these are the first two ideas that come to mind.