They have experience and good references.The problem with property managers operating on a "time and materials" basis with their maint. staff, is that, regardless of what they tell you, they have no incentive to hurry (in fact, just the opposite, to keep these employees busy at your expense).

To facilitate commerce, certain organizations combined efforts to create a set of laws that would represent "ideal" legislation to govern commercial transactions.

Keeping the type of investment that you are doing will work great if you are planning on making this a more full-time operation.

Numbers below:Purchase price: $125,000Down Payment: $25,000Mortgage payments: $6,084/yr (PI $507/month @ 5% 30 yr)Rental Income: $16,200/yrVacancy 5%: $810Property Tax: $900/yrInsurance: $800/yrProperty Manager 12%: $1,900/yrMaintenance: $2,400/yr ($100/door per month)Utilies: $300/yr waterAdvertising: $200/yrTotal Operating Expenses: $7,310Net Operating Income: $8,890Less Mortgage Payments: $6,084Total Cash Flow: $2,806Cash on Cash Return: $2,806/$25,000 = 11.2%Any errors in my numbers?

Have you tried co-operating with brokers in the area and paying them half a months rent to find a tenant?

Any opinion to the contrary given by anyone else will result in the accusation that "you are trying to stop competition because you're afraid we will be successful" or "everybody has to start somewhere " and they will tell each other "don't be discourage by negative thinkers". 7- the best education in real estate comes from courses given at colleges and or by realtor organizations or by CCIM.

Dan,It sounds like your friend approached you and is already willing and able to invest with you, so I am not sure an "initial letter" is needed here.The most important part is your operating agreement if you choose to form an entity in which you both are 50% partners or a well written joint venture agreement if you use your own entities as partnerships.These contracts/documents should stipulate all teh duties of each party, death survival verbiage, insurance, and all details of the deal process.

We have already done several deals together but we are trying to do it on a bigger, on a more organized scale.

I have had success with this organization, camerondirect.com.

I used to run the business personally but as I became more involved in real estate I brought in a partner who runs the entire operation now.