Flipper/Rehabber · Damon, TX · Member since 2016 · 4 posts · 0 votes
Here's the scenario...our out of state partners are purchasing a rental and funding the rehab with cash. My wife and I are providing all the sweat equity from cradle to grave including property management. Any thoughts on how to structure the deal and what split would be fair to all?
The majority of my findings relate to rehabs/flips that most often suggest a 50/50 split. So would this be the case for rentals as well? I'm not seeing how one is different from the other.
Do we split the rent 50/50 and the equity when the property is sold?
Or should we get more up front for finding the deal and managing the project and get a smaller percentage of rents and equity?
Should my wife and I expect to have an equitable interest in the property at all?
Also, our plan is to cash out refi the property and do the process over.
This is where the fun of structuring the deal comes in. There are no "rules". You have to put a deal together that makes sense and works for everyone involved.
Some questions to think about -
How will you take title with this partner ?
How will you handle a refinance with this partner ?
If you are finding the deal, doing the rehab, placing the tenant, working the refinance, then I'd suggest a minimum of 50% of the equity and 50% of the rent.