How much equity to give a property manager?

[Scott Rucker]

I’ve got a small multi-family deal and they guy that found it wants in on the deal (we have partnered successfully before). It doesn’t need much work and is fully rented (at about $100 or so under market rents). It’s a long-term hold IMO. 

I’ve got a couple options and I could use some help sorting them out.

1. He could wholesale it to me ($5-10k).

2. He could manage it for me (I would likely hire a PM anyway) and I give him an ownership percentage - 2%? 2.5%? 3%? each year. He has a little property management experience and is in the construction field, so he would do minor repairs, too. I’m struggling to put a value on this, though.

3. Other creative ideas I’m missing? 

Thanks in advance for your help!

[Aaron K.]

Option 1 all the way.  Option 2 can get super expensive super quick and you essentially bought an investment that declines in value over time, especially depending on price point, not to mention if you want to properly record it it will be a pain in the butt and the lender likely would have issues with that type of arrangement.