Newbie Getting Started: Friends/Family Partnership Structure

[Eric Alvarez]

Hi,

I am just getting started in the real estate business and looking to learn as much as possible to hopefully buy my first rental property this year.

In the case that a friend or family member wants to be an investment partner and loan you the down payment for a property, for example, what is the best practice for structuring the partnership?

-How should the loan be paid back to them?

-If paid back with interest, what percentage is common?

-If they want ownership of the property as well, how does cash flow distribution work (if the property is cash flowing), is this even how you pay your partner?

-What are some of the recommended exit strategies in the case that one of the partners want's to cash out while you still own the property (solely or together)?

My goal is to begin understanding what a sound partnership looks like and how to execute/structure depending on the circumstances. I imagine there are many ways to skin this cat. Any insight or guidance to helpful resources is hugely appreciated. :)

Best,
Eric