Recommendations on investment structure

I will give everyone a quick overview of my situation and then ask my questions. I live in NY, Staten Island to be exact, and am presently a renter myself, with little to no expendable income for investing. I do however have a close friend that has recently come into a windfall of $$ and is looking to do some investing. I have for years been interested in real estate and have read multiple books, websites, etc. All that being said, I have a few questions:

•Normally how is a deal like this structured? What percentages should be offered?

•Any recommendations on what I should look at for our first deal?

I know I'm probably all over the place w/ this post and I apologize if this came off rambling! There are so many things I want to write, and questions I have, but I'll save them for a later time. :D

Thank you in advance for everyone's help, I really appreciate it.

Edited: 06/26/2010 at 04:29AM

Tom Wood

Residential Real Estate Broker · St. Louis, Missouri

254 posts
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Jan 07 '08, 06:12 PM

It really depends on what you plan to do. For example, if you are going to buy, fix and sell you could have your friend buy the property, you coordinate and pay for rehab and then split the profit 50/50. The one thing I strongly suggest is to put together a business plan on what you plan to do, who will do what and that will help determine percentages, etc. It's important to remember this is a business and should be treated as such. Unfortunately, many people lose site of that.

Edited: 06/26/2010 at 04:29AM

Bill Fleming

· Staten Island, NY, NY

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Jan 07 '08, 06:24 PM

gwf - Thanks for the quick reply. Right now it looks like w/ the current market, we would probably be looking at more of a buy and hold since 'flipping' doesn't seem to make sense right now.

We discussed possibly buying a home in need a minor repairs, updates, etc., and having me 'rent' it until the marekt changes, then selling it. My 'investment' would be the rent paid and 'sweat equity' in repairs.

The issue I have is I have NO money to put into this. Lucky for me, he has stated he has more than enough.

Also, I completly agree w/ writing up a business plan. The last thing I want to do it lose a close friend over money!

Edited: 06/26/2010 at 04:29AM

Cheyne Mahelona

Real Estate Investor · San DIego, CA

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Jan 12 '08, 09:10 AM

You definitely don't want to lose a close friend over money. Just keep him in the loop, and tell him everything about what you are doing...I learned the hard way, but just make sure you have plans A, B, and C...then if that fails, pull out plan D.

If NYC or surrounding areas are like CA, then what I would do is look into foreclosures. Deal with the bank for the purchases, then rent them out. Just make sure it would produce a + cash flow if you rent it out.

Certain areas here in CA are becoming more vacant (due to foreclosures, and driving the home price down, and surrounding homes), and the homes are almost brand new (2-5 years old). But people lost out because their rates were adjusted, and they couldn't afford their payments. Unfortunate for them, but good for REI'S.

I'm in the process of creating a pool of local investors to do that. So if you have the means from your friend to do...I would look into it.

Edited: 06/26/2010 at 04:30AM