How to split initial capital invested & profit

Question

Hi all,

Starting to invest with a silent partner; we're going after some singles and small multis in the midwest. I will be doing all the leg work, partner is just investing capital. Trying to determine how to split both initial capital invested, and the percentage of the profit. Thoughts on how to divvy up?

Thanks BP.

Will Fraser · Answer

Hi @Ian Gilligan!  This question has a lot of variable and I'll throw up some ideas on the scenarios I can see here.

- If you are going to be doing the "leg work" that involves flying/driving to said properties in the Midwest, building a team, and overseeing the acquisitions, rehabs, and rents then it should probably be structured to compensate you more heavly

- If you are doing the Long Distance legwork of building a team in the midwest market you guys select and analyzing properties, yet your team on site will do a lot of work for you and your partner . . . I'd be onboard for a more equal split.

A lot of this will also come down to you . . . . what's your best alternative to X? (X being a 50/50 split a 90/10 split, a non split, but silent partner gets really really good returns on capital invested, etc)?  If something makes sense to you and it is the best use of your time, talents, and opportunities then roll with it!

Be well,

Ian Gilligan · Answer

@Will Fraser thanks Will, yeah I realize there's a lot of variables, but this is helpful for sure. Thanks for the input.