All Forum Posts by: Otis Clayton

@Otis Clayton

We typically fund with a combination of Hard Money and Private Money. Hard Money will fund 90% of the purchase price and 100% of the rehab on a draw schedule. Our Private investors will fund the remaining 10% of the purchase price, the first portion of the rehab (to be drawn later from the HML), and the holding costs. Of course, with private lenders, you must give up equity or a return on the debt.

Hi Otis, when partnering on real estate, it’s important to set clear roles, contributions, and profit splits upfront. An operating agreement is key to avoiding confusion, and working with a CPA or attorney can help protect both sides.

Are you looking for a passive partner or someone more hands-on?  

Hey @Otis Clayton,

Partnering can be a fantastic way to scale, but setting clear expectations upfront is key. Here’s a strategy:

1. Define Roles and Responsibilities: Agree on who handles what (e.g., funding, management, deal sourcing) based on strengths.
2. Bylaws to Include: Cover profit/loss splits, decision-making processes, buyout clauses, and what happens if the partnership ends. Clarity here avoids future disputes.
3. Business Strategy: Align on your goals—flipping vs. rentals, risk tolerance, and timelines. Are you scaling quickly or focusing on steady, long-term growth?

Evaluate forming an LLC to protect both parties and outline everything in an operating agreement. The right structure ensures a smooth, win-win partnership! Also, consider creating a JV agreement for the specific opportunity you and your new found partner decide to pursue!

Have you found someone yet?

It's really impossible to give you a direct answer on your question without knowing a lot more about your plans.  It's like asking someone what you should look for in a wife.

You need to focus on what your goals are first, then take a personal inventory of your own knowledge, skills, interests, finances, available time, etc.  After that, make a business plan to execute on your goals.  This will shine a light on the areas you have gaps. Then look for a partner or partners to fill in the gaps.

@Otis Clayton

We typically fund with a combination of Hard Money and Private Money. Hard Money will fund 90% of the purchase price and 100% of the rehab on a draw schedule. Our Private investors will fund the remaining 10% of the purchase price, the first portion of the rehab (to be drawn later from the HML), and the holding costs. Of course, with private lenders, you must give up equity or a return on the debt.

The first place you should start is why do you want a partner? What do you bring to the table and what do you need from a partner?

Nothing wrong with partnerships - I have used one to scale way faster than I would have on my own because he brought skills I didn’t have - but if you can do a deal on your own first to get a better understanding of the entire process it may help you identify what you need from a partner and what types of things should be in the operating agreement.

As for the operating agreement, be sure you sit down with an experienced attorney who will help go over the dozens of scenarios that may come up and how you would like to handle them.

Hi Otis, when partnering on real estate, it’s important to set clear roles, contributions, and profit splits upfront. An operating agreement is key to avoiding confusion, and working with a CPA or attorney can help protect both sides.

Are you looking for a passive partner or someone more hands-on?