Partnership First Deal
Hello BP, not sure if I have properly introduced myself yet but I have been browsing the forums extensively for the past 6 months just gaining a vast amount of knowledge. In any event, I feel like I am properly prepared to pull the trigger on my first investment property. I have a couple of different things going on at the moment.
1) I would like to purchase and hold a long term investments for myself ( I have approx 30k to invest for down payment and rehab). I am looking at the 80-100k range for propties
2) Also a good friend of mine recently approached me saying that he was looking to get into the fix and flip strategy. We would be looking at a slightly higher price point of 125k-150k so there would not be a conflict of interest with my personal investments. He said he has an investor who is also willing to put up approx 25k-30k to cover down payment payment however we will be responsible for rehab costs and would still need to take out a mortgage on the property. We will be responsible for everything the investor is simply looking for a return on their money.
a) The investor is asking for 5% gurantee plus 5% of any profit made on the investment. Just wondering what is considered fair in a situation like this. I've read several of the posts about partnerships where its more of a 50/50 split BUT these were all where the investor was putting up 100% of the cash. In our scenario we are putting up rehab cost and still have risk due to the debt
b) How would a scenario like this typically be handled as far as whos names would be on the loan? Just ours, all 3 of ours, or do we set up a LLC? Im not looking for legal advise but just wondering for anybody who has done a similar partnership how they might have handled.