All Forum Posts by: Seana Yates

Great point, Michael. I wish I had a parent or someone who could walk me through all the ins and outs like rich people do. If I go looking for my own information, I usually just bump up against a bunch of people or companies that lie to me to rip me off.

@Seana Yates FYI, these issues/conditions should be covered in the Operating Agreement of the partnership. Its the attorney's function to prepare the document well.

David, you're absolutely right. And I just realized I can sneak a peek at the operating agreements we use at my job to get an idea of what they look like. :) Thank you!

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Quote from @David M.:

@Seana Yates While people structure partnerships anyway that they find acceptable, here are some concepts to consider:

Your "sweat equity" is great because it saves you in expenses. The IRS just doesn't let you charge for your labour. But,you should be getting more back in the helping to value your property. But, if others work on your property, you should just be compensating them with payment for a job done.

Here's the main reason why: equity partners have an actual stake in the profitability of the venture. Many people have wanted to partner with me, but they only want to share in the profits. When I ask what happens if we lose money (which does happen unfortunately), they start backing off and giving me reasons why they need to be paid out anyway.

For any investor, your assets are at risk. So, if somebody wants to invest with you but can't share in the losses, then they aren't really investors.

Once you start "pooling" funds, my understanding is it falls under SEC rules and regulations. If you actually had a true partnership where everybody was involved in some shape or form, then its okay to proceed.

Hope that helps. Happy to chat. Good luck.

I think you have a great point. Thank you!

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Quote from @Kevin Sobilo:

@Seana Yates @Seana Yates, here is my thinking. I'm sure you'll get differing opinions.

1. People who do work like electricians and painters I would PAY for the work they do as usual! They can save that money and when they have enough partner with you on a future deal.

2. People who invest and also add sweat equity would be partners proportional to their monetary contribution and get paid for the work they do separately. This way people are specifically and equitably compensated for what they contribute both in money and in work.

3. Friends who want to invest small amounts like $5-10k but have no active role in investing is trickier. Technically you are talking about a "syndication" where you are the general partner who does all the active managing of the deal and your friends who would be limited partners and completely passive.

Probably too much hassle to do for small deals and for small amounts of investment money. It would be better if they contributed more money and they were an active participant in the deal
with you.

I'm sure there are other ways of handling these things, but that is how I think about them.

I appreciate this advice. It seems very sensible and I agree with a lot of what you're saying. I may just end up taking the plunge myself and hiring vendors the way I hire people to work on the properties I manage at my job. Much less complicated.

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Hi All,

New investor here, but I'm a commercial property manager and house hacker so not entirely green. My question is, how do you guys structure partnerships? For example, if I take the DSCR loan myself and use a HELOC for the down payment, the property is in my name, but I have friends and associates who might want to invest, say $5k or $10k. Or a friend has electrician experience or helps paint, how would someone be involved?

I am also skilled in painting, woodworking, restoring, installing fixtures, ect, so I'd be doing a lot of sweat equity myself. I'm just not sure how to quantify those things fairly. I'd also be managing the tenants and leases myself.

Any suggestions or examples of what you did in the past that could be applied to this?

Thanks!

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All Forum Posts by: Seana Yates

Seana Yates has started 1 posts and replied 5 times.

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