Buying with family tips

[Spencer Downing]

Hello I am looking to buy my first rental house and it will be with my Brother as it is his inlaws house and is getting a great deal on it. I am a little worried about investing with a family member especially as it will be me doing most of the work. Does anyone have any input or suggestions as ideas to make it successful? I would like to build an exit strategy before the investment to ensure we both are clear on the expectations of the property would be interested in some ideas that I should include in that as well would like to have something written down about how to end the deal if one party wants out and would love some suggestions on what that might look like. I am an avid investor but just looking to start in the real estate market when this deal came up, my brother is not much of an investor and has not researched anything with real estate but is excited about the opportunity that being said he is also not in the same financial position as myself with much free equity so different points in our life i guess is what worries me.

Thanks 

[Roy Cleeves]

You have the most important items already in your mind. 

1. Exit strategy

2. Written agreement on who will do what work and how income and expenses will be shared. 

3. Written process for buy out and in the event of death. 

4. Add a dispute resolution process such as agreeing to arbitration or mediation etc. 

5. Consider property management instead of trying to do it yourself.  That way it is impartial and in the hand of a third party so there is no resentment or claims of not doing the best for the property in terms of tenant placement etc. 

6. Talk through some scenarios and discuss how each of you would handle that scenario and this will help you see if you are in the same page. 

And best wishes.  I did this with my brother in law for the first investment and it was a sore spot till we sold the property. 

So I learned the hard way!