Isn't this a bad idea???

[Luke Carl]

Ive found a groove doing vacation rentals and a wealthy friend wants in. He's putting down payment and getting conventional loan for full amount. He wants to personally finance me half of everything (70k) on the side with interest (3.65% same as bank). I manage using my superhost account, keep it packed, handle every detail, he never visits the property. He wants the property paid off before we take a penny. He told me he plans to take a chunk of money from elsewhere soon and pay off his end (entire purchase price). He sent me my amortization schedule. I won't see a penny for close to 7 years and that's if nothing ever breaks. Is this terrible idea? Am I just signing myself up for 8 years worth of work to eventually make an extra $1000 per month while continuing to work from years 8 to X? Its a win win for him, he puts up initial cash and risk. Uses me and my system, my cleaning crews, my handymen, my superhost account which I've gotten from my hard work... he pays off the mortgage in a few months.... he's making 2k+ per month plus interest off of me right out of the gate. I don't see a dime for 8 years. Am I crazy or is this like going to Starbucks and then saying hey we'll pay you later if we get around to it. Bad idea? Please show me the light. I know I can't be choosy because I'm cash poor but shouldn't I just save for a few more months and get one of my own and pay interest to the bank on a 15 year loan? Thanks!

[Jill Haselman]

I wouldn't do this deal.  We can run numbers all day long, but in my professional opinion in both real estate and all other business enterprises, a Partnership should be a Partnership.  Every hour of your time and proprietary knowledge is worth every $xyz of his money.  There is equity ($) and there is sweat equity (work = $).  They are "pari passu", or certainly should be.  Most importantly, in my book of knowledge, is critical component of trust and mutual respect.  Without that, the dollars are worthless.  

Besides, he is foolish to believe he will get healthy returns during this time period if his "Partner" isn't motivated or feeling like a respected, equal business partner.  His money makes nothing without your sweat.  Don't forget that.

Just my two cents.