Can a Friend Invest In My Properties?

Question

Hi, I currently have 2 rental properties with about $140,000 in equity and they cashflow a little over $550/month. My friend approached me about investing in rental properties together. I thought about doing a cash out refinance to invest in a new property with him but another idea crossed my mind: I could have him invest capital into my current properties by buying equity from me and I could then use that capital.

First question, does this make any sense at all? Second, how could we structure the deal to make sense for both of us? I would be the property manager and he would be more of a silent investor.

Thanks!

First question, does this make any sense at all? Second, how could we structure the deal to make sense for both of us? I would be the property manager and he would be more of a silent investor.

Thanks!

Ty Hanson · Answer

Don't muddy the waters on your already successful property. Find a property with your friend and create a 50/50 partnership.

Caleb Brown · Answer

I think it'd be easier to go after new property and structure a partnership. Delegate roles and have a defined plan for each person. Legally consult an attorney so both are protected.

Danielle Jackson · Answer

I would suggest identifying a new property together. Make sure the partnership agreement is detailed and in writing and ensure both active roles are clear and defined with benchmarks for progress. And create a detailed budget!!

Ralph DiBugnara · Answer

Hi @Lee Kulow, have you discussed this with your lender?

Can a Friend Invest In My Properties?

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