How to Structure a Deal with Capital Partner? OPM

[Joseph Crunkilton]

All, 

I am looking to expand my rental portfolio with capital partners. Since starting my REI journey I have been approached by family members who want to go in on rentals with me. I've got teams in place to get this taken care of. My question is how have you structured deals like this? Do you use an operating agreement? How would you get financing?

I will be doing all the work and managing the property so it will most likely be a 50/50 ownership. I'd prefer not to use my LLC for this because I use that solely for my flipping business.

Thank you!

[Daniel Dietz]

What we did in this situation is set up a NEW LLC, that our existing one is 50% owner of and the Capital Partner is 50% owner of. The CP brings ALL of the down payment, and we do ALL of the finding, funding, PM etc..... Everything is split 50-50 .... cash flow, equity growth or losses. The CP can get their down payment back if we do a refi and there is enough equity or when we eventually  sell some day.

For financing we just use a Commercial Portfolio lender which is a local credit union. I finally found a local lender that will do a 30 year fixed rate for a partnerhsip (Fannie I believe) BUT it has to be in our personal names for the first 6 months and THEN we can transfer the Deed to the LLC.

Dan Dietz