Partnerships

[Jared Adamson]

Tonight I had a meeting with an acquaintance about getting involved with their property fix and flips. They have been buying properties with cash, fixing them, and then selling them. They have been limited in number of deals they can pursue because they can not qualify for a loan. They are proposing having me take ownership of the properties (I have great credit and a W2 income) using their money for a down payment. This would enable them to leverage the banks money and work on more properties at a time.

Is this type of partnership a good idea? Would banks go for it? What are some red flags? How should the partnership be structured? Any ideas, information, or discouragement would be greatly appreciated!

[Roy N.]

@Jared Adamson

A wise and experienced caution from Don.

Another is to remember that all partnerships end - some end well, and some messy, but they all eventually end. If you decided to pursue this, before any money is invested, speed a little to sit down with an attorney, and possibly your accountant, to draft a partnership agreement which provides guidance for operations, disputes and dissolution that is fair and clear to both parties.