Need ideas about how to partner with cash investor

[Caleb Anderson]

Hey BP, I am in the works of starting my first REI project. My father in law is looking to partner with me, him bringing the cash, myself finding the deal and working it. What are some strategies and ways he could make money partnering with me? I keep hearing cut profits 50/50. What happens if we sell the house? If it is possible for him, should he completely pay off the house? Just looking to hear some strategies and ideas.

[Account Closed]

@Caleb Anderson You can structure any way you desire. Even though he is your father in law, it can't hurt to put terms into writing just in case tensions rise in the future. If it is a flip and he's bringing the cash but you're doing the labor, I think giving him 50% of profits may actually be excessive. Risk aside, bringing the cash to the deal is the easy part. Think of everything else you'll have to do while he would just be collecting his profit.

I would advise against him completely paying off in cash - especially since its your first deal. What if things go south? Mitigate losses by minimizing cash invested up front. Having him fund the down payment and maybe some rehab and then leveraging the rest of the property on a mortgage would make much more sense in my opinion.