How to divide profits/equity with different types of partnerships

1 Reply

Hello all, I'd like to get the opinions of our investors on how you typically divide ownership/profits/etc. and the accompanying responsibilities each partner is responsible for. Here is an example: 50% - 50% split of cashflow & equity - partner 1 finds the deal and funds the deal, partner 2 rehabs the deal and oversees property management for the life of the deal, partner 1 manages the realtor to sell the deal. I would greatly appreciate your input here. One of the things that holds a new investor back is a fear of being ripped off without knowing it. Your input will help us understand what is or is not a fair deal. Thanks! Tommy Pace

@Tommy Pace I have done a variety of different splits. A lot of times I base it off what the investor/partner is looking for and what they bring to the table.

I am a big proponent of paying the money/experience really well. I see a lot of new folks only willing to pay a 20% split to a cash partner, or trying to make it so they have a home run on their first or second deal. To me this is crazy, they are new, have no experience, and can't do the deal themselves. In my mind, the investor is taking all the risk, so pay them so well (a majority of the profits), that it is a no brainer for them to keep doing deals with you while you learn. 

Don't think of it as getting ripped off, look at it as they are willing to spend their money to help you learn.

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