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Updated almost 4 years ago,
How to compensate partner who pays a percentage of down payment?
Hi Everyone!
I'm about a week out from closing on my first property, a duplex I'm house-hacking. I realize this is a question that should be answered already, and we have discussed it a few times but not landed on a concrete and logical solution, but I'm wondering what people think is the right way to compensate a business partner who helps cover the downpayment. To be brief, I needed my brother to co-sign on the mortgage for me because I had changed jobs frequently the past few years. Instead just lending me his credit and income, he decided to be a part of the investment and contributed by bringing my 15% down up to 20%. So that's all he is contributing, 25% of the downpayment. I am paying the remaining 75%, closing costs, repair costs, and managing the rental. He's just money. While I live in one unit, the house won't cash flow, but my payment will be low. Once I move out, it will cash flow about $500/month. My question is, what is the right way to compensate my brother. We plan to hold and rent long term. Should he get 25% of everything? Annual income and equity at sale? To be clear, his money is not a loan, there's no interest. He's just in on the deal. Thanks in advance