Tax, SDIRAs & Cost Segregation
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Updated over 4 years ago,
Allocation of share in a JV BRRR when partners bring unequal $$$
Closing on a property in a few weeks (my first ever). I can either complete the transaction in my name or assign it to a corp upon closing. I'd like to do the project as a JV or toher type of partnership in some way since the project is going to be pretty big and I'm slightly intimidated by it. Although I'm decently handy and have some renovation experience, I think this project will be bigger than DIY, especially since this is my first property purchase. I have a coworker at my other job that has done renos and a rental property before and is more handy than I am. He's a go-getter and has the trucks and tools already to take on a big reno. The problem is, his cash is tied up in his properties for another year before he can refinance. I on the other hand, have enough cash to buy the property outright and fund the renovations without loans, but I do not have tools, trucks. equipment etc. He also has experience doing a project just like this where as I am a first timer. So given that I'm looking to partner with my coworker but we bring different things to the table, how do I value our different contributions and structure the partnership to ensure a win-win? If this project goes well we would like to work together on the next ones, so it would be in both our interest to make sure we both feel like we got a win. If there are any ways to structure this deal that you can think of, please share.
Details on Us:
- -I'm bringing all the cash to the deal, as well as time, some reno experience.
- -My credit worthiness is less than prospective partners.
- -Prospective partner brings tools, trucks, equipment, time and experience to the table
- -We already work together as independent pool and landscape contractors. Our schedule is under our own control.
- -Exit strategy is refinance after rehab and renting. I can afford to leave some money in the property, doubtful that my potential partner could in 5 months time but maybe in a year.
The property:
- -It's currently an owner occupied legal duplex (2 bed up, 2 bed down) in a century home with enormous unused carriage house (garage)
- -House needs a lot of cosmetic help and updating but is structurally and mechanically sound.
- -converting it to a fully rented triplex (2 bed up, 3 bed down, 1 bed plus den in converted carriage house). Zoning is all sorted, just need permits and drawings.
- - Carriage House needs a lot of work to convert buuut has a modern foundation meant for a two story house and roughed in plumbing.
- - Renos will take 3-4 months unless permits hold us up.
- - Property is in Kitchener, Ontario, Canada