Friend wants to start partnership, no experience but has capital and credit. How should I structure?
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!