Joint Venture Questions

[Roberto Buttazzoni]

Hello, I am brand new to Bigger Pockets. This is a somewhat long post of me explaining my strategy and asking for experienced advice on joint venture rehabbing... Currently I’m reading all I can about RE and from many different authors, investors and coaches. My wife and I have saved a decent chunk of money in the last 10 months and we are about to start hunting for RE. We probably could only just make our first deal on our own, however we don’t fancy that strategy. We intend on partnering with a great many of our friends, acquaintances, possibly even family immediately and in the long-term. Sister only for the first deal.

In a nutshell our strategy is start with multi-family (3-5 units) and try our best to buy a place with at least 1-2 units vacant where we can apply gentrifications to increase value. BRRRR basically... I am an expert tradesperson in my specialty and have consequently learned almost all other residential and commercial building trades to a high enough degree to perform high quality (no corner cut) workmanship myself. So we want to BRRRR unit by unit and property by property. Until we buy enough that I can't keep up and I have to hire contractors/handymen I will do almost all work myself.

The road block I keep running into, mentally mostly, is; what percentage should be fairly tacked onto my wife and my percentage for doing all the work. Sweat equity. Others are passive investors only.

For example:

Our first property will be 50/50 down payment.

The renovations will be 50/50 split on material & any other costs.

All profits will be 50/50 split as well as rents.

So where do I fit in my fair share of sweat equity? I want this to be very fair for all of us, I want to be compensated for good value increasing work and I also want my investors to do well in the deal, benefit from my work and their investment also. I want our first deal to be a huge advertisement of success that will attract other investors and friends and I want this to be a win-win situation.

I have heard of 70/30 the 30 for sweat equity only but that was for flipping.

Anyone else figure out anything for this type of sweat equity deal in the past? Something similar?

Also we don’t plan on flipping, buy and hold but definitely take the equity of renovation out of the property for the next investment.