All Forum Posts by: Lauren Cook

@Drew Sygit This is a very interesting way to do things and I haven't thought about it before. I think the issue is the partner wants to get a long term return on his investment and doesn't just want me to turn around and pay him back. 

@Nathan Gesner The issue with this is that my partner is a silent partner, and doesn't do any labor. I forgot to mention I'm the one with the area knowledge as I live where we are investing. He lives in California and is extremely hands off. No vendor contact, no sweat equity put in on his end, etc. 

I could use some advice! I own two homes, one primary and one investment on my own. I also have equity (35%) on a third worth about 365k that closed in February. I have been doing house hacking for a few years and have decent experience with property management as I did it professionally for years and have been a landlord for 5 years. I recently purchased a townhouse with a partner who put up his credit/downpayment and about 12k in rehab/commission to get the property rented. It was rented day 1 on the market. I set up all vendors/projects that were larger and did a lot of work myself as well as paid for a lot and was reimbursed shortly after. I also set up the LLC and am in charge of all tracking, accounting, checking vendor work, tenant relations, two how's, etc. he sends the money and bills and I do the rest.

Originally our split was 80/20 but he changed it to 65/35 and gave me a small cash bonus since he was so impressed with my work. (I lived there temporarily on a blow up mattress to ensure all work was completed and managed as the house was an hour away from mine.)

I don’t necessarily need opinions on partnership, he’s been a great partner everything has been going well. He’s a tech guy that needs the write offs, likes real estate investing but is pretty hands off.

I also cannot afford to buy properties on my own right now as I live in a hot market (Phoenix) and nothing here worth buying is under 220k and I’m not comfortable yet buying out of my area.

The next property is his downpayment, closing costs, etc, but my credit. I’m paying about 14k off in debt in order to qualify and we are discussing what this next equity split will be. I told him without knowing if the next property needs work or if it’s turnkey it’s impossible to discuss equity split right now. He’s mentioned 80/20.

I’m struggling with if this property is utilizing my credit and I’ve already shown my track record of doing good work, why my split would be less than the prior. I also don’t want to upset him but I want things to be “fair”

Anyone had successful partnerships able to provide any guidance or advice?

Her cell is 520-971-4270, make sure to let her know that Lauren Cook referred you. She definitely knows the area and I personally know 7 people she's helped.

No, I have investment properties in Phoenix. My parents have rentals in Tucson.

Hi Sally, my family and friends has worked with Patsey Sable for years. She is awesome and been a realtor in the area for over 30 years. Her number is  520-918-5449 and she's with Long Realty. Are you also from the Bellevue/Kirkland area? I have a 425 area code as well.

I just picked up a townhouse in Gilbert and it falls below the 1% rule. I bought for appreciation and to hold long term knowing that rents are picking up/values are going up quickly. It was 340k and it rented for $2,000. It was fully gutted and remodeled prior to putting it on the market. The thought is I'm just starting out and didn't want to put 35-40k into it myself. 

@Drew Sygit I'm trying to figure out why my time is worth, it's a fine line. I want to be "fair" but I also don't know how much time/effort it will be, as my other investments were more house hacking, and the projects we are starting are more rehab and rent out type projects.

@Account Closed I appreciate your explanation. 

We did set up an LLC, not necessarily a partnership per say. All good things that you brought up and I'm definitely thinking down the line of more of a 50/50 split (or 51/49) when I can call myself more of an "expert".

@Darius Ogloza I like the idea of negotiating down the road in good faith. I think I'll probably go with the hourly by project above and beyond, as you mentioned. I wasn't sure how others are doing splits like this.

For the past few years I've house hacked and have a background in real estate sales, lending, and property management. I'm not an expert, however I'm certainly not new to investing. A close friend of mine approached me wanting to get into real estate investing a few months back in the Phoenix area. He lives in California and has an extremely demanding job and family. We decided to start an LLC and discussed how we would invest and what responsibility each person would have down to extremely finite details and agreed on everything.

Essentially, he is the credit and money or passive investor. I'm more of the active partner, getting the the LLC set up and the boots on the ground person as I'm in Phoenix and he's in California. I will be finding the property, getting it rent ready, screening tenants, leases, dealing with tenant correspondence, repairs, and coordinating everything needed to be successful. I will do everything even open bank accounts for the LLC(s), pay bills, mortgage, etc. He just wants to collect the check every month essentially.

Initially, we discussed a 80/20% split of the equity and a small management fee per property. I.E. he puts in 100k, once we sell he gets the 100k back, all profit after that is split 80/20. If I put any money towards properties in the future, the split would change. Ultimately, his plan is to purchase 2-3 single family homes per year.

However, I have found a perfect property and it needs a little bit of work in order to get it rent ready. I am now going to act as more of a "project manager" with him purchasing all materials but I will fix up the property and landscaping myself. Anything that  I cannot do myself, he will pay a contractor to complete and I will coordinate.

How do others do this? Charge the LLC an hourly rate, and take that out of the operating account? Roll that amount as a percent of equity?

Is an 80/20% split enough for this?

This is the only person that I would invest with outside of family, I have helped with getting his credit up, eliminating debt and getting him in a better financial position in order to get going on investing and I want to make sure that we are set up for success.

Any advice is much appreciated!