Starting a Partnership with a Friend. In need of a Contract.

[Raymond Brown]

Let me start by saying I love real estate! It provides so many opportunities that would otherwise be unobtainable by ordinary people like me. So I have jumped into it looking for as many opportunities as I can find.

I am currently working through a for sale by owner deal and discovered that this seller is no ordinary real estate owner. He owns more than 150 properties and is now looking to retire. With that being said I am trying to learn as much as I can from him while also trying to acquire more property.

In order to be able to scale the business and purchase more property, I am working with a good friend of mine to partner on a couple of deals. 

Here are the terms:

1. 50/50 on money down and any associated cost to purchase the property.

2. As real estate agents and property managers he wants my wife and I to manage property.

3. He will be completely hands off (Since he will be a remote investor) and does not require any profits made from rents.

4. We will split the equity 50/50 when we go to sale the property.

I have a couple of questions:

1. Has any one done a deal like this?

2. How do we structure it to create a win-win scenario for both of us?

3. If there are any damages or large capital repairs required how should we handle (HVAC, Roof, Plumbing etc.)?

4. How do we structure it for when we should sell property, or any extra payments made by us from profits to escalate payoff of property.

Any other advise when going into business with a friend or any example of contracts are wanted and welcomed. Thanks in advance!                                                                                  

[Caleb Heimsoth]

@Raymond Brown. You’ll want an attorney for this. So many things you never even mentioned and to many to get into on a forum. Talk to an attorney.