Raising Capital for Deals and Scaling

[Janett Lewis]

I have represented buyers and seller in RE since 2008 in San Diego CA. Seeing little to 0 opportunities to create cash flow I decided to start investing in St. Louis MO. I am 7 deals in and have 5 homes that are rented and cash flowing. Now I want to take it to the next level. I have an opportunity to partner with a person who wants to bring money to the deals. What do i need to know that I probably don't know yet? What is the best way to insure a win for both sides? What are the splits, and how do you structure the business moving forward? Does anyone have experience and advice that can help me make smart decisions?

[David Ounanian]

@Janett Lewis great question. I'm thinking it will depend on a lot on what you negotiate with your partner. They could just be a private lender where you pay them a set interest rate for loaning the funds. Or they could have a piece of the profit (or loss) from the deal itself. I have seen deals where the person that brings 100% of the funds but does none of the work splits the profits 50/50. But it can vary based on who does what. If you were to organize a deal like this, all of the roles, responsibilities & finances need to be documented before hand. One could organize an LLC with the partner and document this in the operating agreement. You may also want to consult with an attorney.