Investor · Louisville, KY · Member since 2017 · 102 posts · 80 votes
I am partnering with 2 people. Each of us will be investing equally but I feel as though I have more knowledge on how to purchase and manage rentals and have all the forms/processes laid out.
Granted, my experience has been 2 years of running my Airbnb and only 2 months of owning/renting a 4 plex. BUT Ive spent the past 3 years reading all the BP books.
One partner has no rental experience. And the other had a horrible experience 10 years ago..
What is my “experience/knowledge” worth? In addition to that, I also feel as though I am the ring leader, putting together action steps, keeping us moving forward/getting clear on our goals, etc.
Real Estate Consultant · USA · Member since 2014 · 1k+ posts · 751 votes
6y
@Justine Scheuher I don't think the amount of knowledge is as important as what each person will be doing as part of your joint venture. You should layout a Joint Venture agreement that describes what each partner will be doing. If the investment is equal and the work is equal then I think the split should be equal.
Rental Property Investor · Canton, OH · Member since 2017 · 1k+ posts · 1k+ votes
6y
@Justine Scheuher
I'll just add...from my experience (for residential), there's not a lot of meat on most deals to feed 3 people. Depending on your goals, you're probably going to need a significant number of doors to make it financially worthwhile for everyone. And that could add a lot of stress to the relationship.
Rental Property Investor · joppa, MD · Member since 2012 · 4 posts · 2 votes
6y
No there is definitely effort... as I said "put in the time and do the research." Personally, I would rather expand my mental database than rely on that of someone else. Too many hands in.... too many opinions... the disputes are real. I know someone who straight walked away from a partnership and abandoned all time, effort and money in because by the time the dispute went through the legal system, it wasn't worth the fight. If you want a successful partnership, each person needs to bring something different to the table and know their lane.... It doesn't sound like this was your arrangement.
I am partnering with 2 people. Each of us will be investing equally but I feel as though I have more knowledge on how to purchase and manage rentals and have all the forms/processes laid out.
Granted, my experience has been 2 years of running my Airbnb and only 2 months of owning/renting a 4 plex. BUT Ive spent the past 3 years reading all the BP books.
One partner has no rental experience. And the other had a horrible experience 10 years ago..
What is my “experience/knowledge” worth? In addition to that, I also feel as though I am the ring leader, putting together action steps, keeping us moving forward/getting clear on our goals, etc.
Justine, syndicators make (on average) 1-3% acquisition fee and a 1-2% asset management fee, as well as promotes, disposition fees(some of them) and many others. Their investors (usually) walk away happy and gladly come back to invest more.
The people that approached you know you add value that they don't have, so you should not feel wrong in charging them for it. How it comes is up to you. If it's a long-term rental, and you'll be doing the management, maybe it's just an added property management fee by separate agreement, maybe it's additional equity, maybe it's a bag of snickers bars delivered quarterly. Whatever it is, make sure it's agreed upon and written into agreement before moving forward.
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
6y
@Justine Scheuher
7-10% of rents. Just like a property manager. But if you can talk the other partners into something different, then your skills are even better and worth more.
I’m partners with two friends. Equal investments. I do the leg work, paperwork, tenant handling, finances. Pretty much everything. I take 7% of rents off the top. It’s a great deal for them, and it allowed me to expand my portfolio with the influx of cash from partners.
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
6y
@CJ M.
Well, you can’t buy 1/3 of a property either. If she needs the cash to get to that next purchase or level, then taking on partners is a great idea. 33% of a deal is better than 100% of no deal.
Just make sure everything is in writing, ahead of time. Especially the buy/sell agreement.
Belfast, Northern Ireland · Member since 2018 · 128 posts · 56 votes
6y
@Justine Scheuher
I think what portion of the deal you get largely depends on the duties each person will cover in the partnership and operation of the property. For example if someone was to invest money and manage the property this would be worth a larger piece of the pie.