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Updated over 8 years ago on .
Partnership vs private money on rental properties
Hello,
Fairly new investor here. I've been house hacking for the past 5 years, so I have some minor experience in purchasing real estate and dealing with tenants. I was recently let go from my job and am currently self-employed. Most likely I will need to let my self-employment business season for another year before banks will readily approve me for conventional loans. In the meantime, I am looking to partner with someone I know to purchase a property cash. My question is, what is customary for such partnerships? We each would be providing half of the cash, but I would be doing all of the work (acquisition, rehabbing, managing, bookkeeping, etc). Like a 60-40 equity split? 75-25? Would it be better just to take the money as a personal loan? What would be customary for a rate of return (I was thinking like 8%).
Technically I have the cash to go solo on the deals I'm looking at, but I was prefer to own a smaller portion of more properties for risk mitigation.
What're your thoughts?
Thanks!
Don