All Forum Posts by: Mike Cowper

@Account Closed - That isn't a bad idea. LLC's are pretty cheap here in Michigan and that would add a layer of protection for both of us.

For the escape clauses, you can always write into the contract an inspection period or pending approval of a partner. I'd be a little cautious on this because if you frequently back out of deals, you could get a bad name and that would potentially hurt you in the long run.

Also, if you end up not being able to find a buyer you don't actually have to close you would just lose your EMD.

@Cal C. - I know, but I can tunnel vision at times and get stuck on a thought or opinion. Another reason I think a partnership long term may make sense and why I ask crazy internet people (like all of us on BP) for their advice. Especially from people with experience and knowledge as I try to get some of my own.

Thank you everyone for the insight and advice. Here is what we decided upon:

• He is going to fund the deal 100%
• He is going to refinance, in his name, after we place a tenant and the seasoning period has passed
• He is going to receive a 0.75 point return for every month until the initial investment is paid (refinance).
• We split the profits and cash flow 50/50
• We then evaluate whether this is something we want to continue doing together or not.

I kind of blended a little bit of what everyone recommended, discussed with my friend, and this seems to be a win-win for the two of us and our goals. What do you all think?

He only wants to fund half of the deal - so I would still be coming up with half the money.  

I have been diving in head first when it comes to real estate investing and have started getting some people I know excited about what I am doing. I have a friend who wants to get involved, have a 50/50 partnership, and I am wondering the best way to structure it (or if to even do it). Here are some details:

• He has capital, and has access to more.
• He has good credit, no mortgages to his name.
• He is extremely risk averse, which can be good and bad (In my opinion)
• He does not want to actively partake initially. Knowing him quite well, once we get a deal under our belt he will jump on full board.
• He has zero RE knowledge as of now
• He wants both of us to fund the projects

So where I stand - I'm comfortable doing a 50/50 partnership but I don't want to put in money for our first deal. The way I feel is I bring 50% worth of the deal to the table with my RE understanding, the work I would put in locating, negotiating, and securing a deal. I also have access to capital now, so I would essentially be giving half of my profits away if I find a good deal. On the flip side, in the future there would be more opportunity with the combined capital and work (he really will get into it once he starts making money).

Please let me know what you all think, the advice here is great and I want to make sure I'm not missing anything (good or bad). 

Thanks!

Have you considered partnerships? You could use resources beyond cash and split profits. For example, you could put up some of your money, locate a deal, prove that there is money to be made, then identify a person that may have cash but not other resources. If you find a good deal, you should be able to find someone who would want a piece of it. 

@Account Closed - Can you hold receipts in QB? What I'm looking to do is not have a bulging envelope with all my stupid receipts and take a picture or scan them in and associate it with the property the expense took place at. Would this work? Also, do you have an affiliate link where you get consideration for the purchase of QB? If so, please DM me and if I decide to go this route, you'll get a little something for helping me out. 

Good question @Ulises Romero - I had been wondering the same thing. I've been sharing a lot about my business and some people have been interested in "getting in the game" via being a lender, I didn't know what I should offer that is fair for everyone. @J Scott - thanks for the answer, that makes sense.

A work around for the assignable contract would be to get the property under contract with an LLC, then sell the LLC for your fee plus setup costs of the LLC. The buyer would own the LLC and the contract wouldn't technically be assigned.