Structuring STR Partnerships

[Mike De Lota]

My wife and I found a partner for an STR who is willing to to pay down payment, decor and rehab costs, while we would secure traditional financing (jumbo loan at a competitive rate), build a team in our vacation market, and potentially self manage. How would you structure the payouts in this partnership? With the increased debt:income and leg work we are incurring, somehow 50/50 seems skewed in their favor.... To be clear, he is not a private lender, he would like an ownership stake in the property. He has non-traditional income and has been denied loans by multiple banks/lenders.

[Justin Anderson]

I think it ultimately depends on what you guys feel is fair and structure the deal accordingly.  

Right now I have 3 STRs of my own and a good friend heard of my returns and wanted to be a part of the action.  We made a partnership where he puts up the down payment, I manage it for a fee, and I 'pay back' that down payment over time to buy in as equal partners.  Rehab is done by both of us as needed and we just keep track of money invested to make sure it's equitable. The house is fully in his name and we have a partnership agreement outside of the note that outlines all the details.

There isn't a right or wrong way to do this.  Just make sure you both are in agreement before you pull the trigger and then get it down on paper.