I have the opportunity to buy some multifamily properties with owner financing - score! The plan is to purchase half of the property from the owner, while he continues to own the other half. The original owner would manage the buildings. I would pay him the half mortgage payment, and then we would split the profits 50/50. The plan is that every year going forward I can purchase more and more of the building, until I am 100% owner. He already has the buildings in their own LLC.
The power of partnerships is endless, but I'm trying to understand how this specific opportunity would be set up and how the logistics would work. I don't even know where to start searching because I don't know a name for this type of purchase. Any insight on this would be helpful as I try to understand owner financing and partnerships, and this specific deal set up.
My Short answer- find an attorney who can draw something up.
Off to top of my head (and I've done something like this) I would structure it with your own LLC, identify the specific properties that you own, and have a management agreement in place. Over time, purchase more w/ your LLC and have them added to your management agreement. That may not be the best way to do it, but at least one way to approach it.
I wouldn't do a profit sharing model so much as you clearly own your properties, they own theirs, and you each make $$ on your holdings. I feel like splitting profits can become more difficult if you have a difference of option with repairs or upgrades that are/aren't done and how they are paid for, etc.
My $.02 but perhaps smarter people than me have a better idea.
@Andre P. That sounds simple enough. I'm probably trying to make it more complicated than it really is. It's a contract just as I described it, written up is some grand legalese. Good idea to have my LLC purchase it too. Then both our LLCs are on the property title?
And instead of profit sharing, what do you suggest?
Thanks for the input and help!
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