Rental Property Investor 路 Apex, NC 路 Member since 2018 路 66 posts 路 10 votes
Hey BP,
So I'm trying to figure out the best way to structure a deal. I have an opportunity to purchase an off market property that I plan to BRRR. This property was brought up to me by a family member. Basically they have a neighbors house who is interested in selling. My family member wants to invest $10k and I have all the other capital and the knowledge to do the deal. I would be the one on the loan and their money would be used for renovation costs. So basically I'm doing all the analyzing, managing rehab and managing once complete, negotiating etc. I want this to be beneficial for both parties and it gets a little dicey since it's family. Ideally I would do this deal by myself but since they brought it to my attention and want to invest money then they want in.
Here are the numbers. Any thoughts on how I could structure this and what it would look like? Or should I steer clear? 馃槀
Hey Justin, just some advice. Anytime you do business with family or friends, go into it just like you would any other business partner. Have an agreement or contract drawn up outline terms, responsibilities, etc. Make sure you are all clear on expectations, decisions, and what happens if the project loses money.
For this deal specifically, if it's just a one off with this family member, it might be cleaner to let them keep their $10K and just throw them a finders fee.
Hey Justin, I would split the profit 50/50. I think the relationship and potential future deals is worth more than the money you will make trying to get every dollar out of the deal.
Hey Justin, just some advice. Anytime you do business with family or friends, go into it just like you would any other business partner. Have an agreement or contract drawn up outline terms, responsibilities, etc. Make sure you are all clear on expectations, decisions, and what happens if the project loses money.
For this deal specifically, if it's just a one off with this family member, it might be cleaner to let them keep their $10K and just throw them a finders fee.
Hey Justin, I would split the profit 50/50. I think the relationship and potential future deals is worth more than the money you will make trying to get every dollar out of the deal.
Future deals? Does this family member have more neighbors who want to sell? LOL. They don't exactly sound like someone who knows how to consistently find off market deals
With purchase and reno you'd be all in at 85% of ARV. Apart from unexpected reno costs, carrying costs, closing costs, etc. The deal isn't worthwhile. At $130K purchase price, yes