Using a Credit Partner and Fronting all the Money

[Andrew Lacy]

Hi all,

This strategy is something that I may want to use in the future. I want to know BP's thoughts if this is viable or even legal. So I have a few trusted friends who have more time than money. I have more money than time. Ultimately, I would like to buy properties with them and pay the entire costs including renovations.

The plan would be to do BRRRR with this partner. I would supply the cash, the loan would be in their name, and we would refinance to pull the cash out. I would then take the cash back that I put up front.

I would propose that this partner have a 20% equity stake in the property. I would retain an 80% stake, and we would be tenants in common. I then would propose that the partner is paid 10% to manage the property.

Has anyone tried anything like this? Is this even legal?  Are these terms fair if legal and viable?

Thanks!