Ok so. Hi I'm Brian. I'm new. I buy turnkey properties (don't diss me I have a solid day-job). 

This is my first post, and a rather vulnerable one at that, so forgive me in advance.

My parents will both be "retiring" within 6 months. I'm considering doing business with them. They have about 200k to invest and the returns we can get them with that money would help them land safely and actually retire vs worry about money indefinitely. (Yay/scary).

My wife and I are not seasoned investors although we can be very fastidious. We have 4 doors and have never invested with anyone else. We are entrepreneurs, so we have a certain degree of intangible insight through the hard knocks of starting/running businesses. This is certainly part of what causes us pause. LOTS at risk here...

My dad wants to crush it and make money in real estate, my Mom has trust issues and is feeling VERY cautious. She trusts us, but ways we can mitigate risk for them will probably be really good. 

Our plan would be to go in with them maybe even 50/50. 200k/200k. Slowly buying 8-12 single family units in linear markets in the midwest, keeping a healthy cash reserve, and coming up with a distribution schedule that is very conservative, one that can allow my parents to live comfortably. It feels like it would need to be iliquid, just distribute and don't touch the properties for 27.5 years or when they both die, but quite frankly Amy and I would love to be able to move money/re-fi/etc if/when needed. So here's my questions. 

1. How do you keep it clean and make sure everyone's interests and expectations are managed?

2. Are there vendors out there who would work hourly to help manage the accounting on something like this? I don't want to bury my wife in paper-work. We have two very young kiddos and all the real estate is hard on her. 

3. As an after-thought, what are the pros and cons of just holding their money and promising them an 8% return? This would be cutthroat in one regard as it would screw my sister as the properties would be in our name and build much more wealth for us vs my parents. I don't want to deal with family drama I don't like family drama. But then I also want to make this thing really cozy for my mother.

4. You think I'm a fool to even think about doing this at all? Danger danger Will Robinson? 

I am truly grateful for your input. Much love from PDX. 

1) I would suggest finding an investment strategy that will work for everyone. I know you only do turnkey, but maybe with your parents, you need to BRRR to get a large amount of equity for your dad and safety for your mom.

2) There are virtual bookkeeping services that can help with everything from paperwork to full tax filings. A quick Google search will bring up plenty. They won't keep the leases off your wife's plate though. Local CPA assistants may be willing to help as well, of course, you would have to vet a good one. 

3) Con of promising an 8% return is if the market falls and you can't pay 8% from your investment then you either need to pay the guarantee out of pocket or explain to your parents why they won't get the return you promised. 

Originally posted by @Ian Tvardovskaya :

1) I would suggest finding an investment strategy that will work for everyone. I know you only do turnkey, but maybe with your parents, you need to BRRR to get a large amount of equity for your dad and safety for your mom.

Thanks Ian! I guess I should ad regarding questions 1, I'm particularly interested in what kind of entity would be best formed, and how the legal side might be managed? 

1. Yes, written partnership agreement.  Two problems: 1. you can't foresee every problem so you will have to work problems out--This can be an issue since it's family 2. It's family so even if it is written you won't follow it.

2. Yes, property managers will do the work--cost about 10%+ of the rent, depending on the area.  

3. Better option.  It is a promissory note on the property.  If you don't pay they can and should foreclose on the property (makes Christmas uncomfortable).  Not screwing your sister.  Parents are being paid for the level of risk they are assuming--less risk, less reward.  Are you happy with 8%?--if you put 50% down a bank would be better. 

4. I would avoid family deals unless you don't have other options.  Someone will always feel they did more work, etc.  You will be mad at your parents, your wife will be mad at you, your sister/parents will be mad at you/wife.  Hard to sue business partners.  Really hard to sue family.  It'll be great until the first down market and your parents need cash to pay for X or you need cash for the kids braces.  

I would do separate deals.  Help your parents find something and improve it.  Work for free.  Let them make the final choice though.  

Originally posted by @John Akolt :

1. Yes, written partnership agreement.  Two problems: 1. you can't foresee every problem so you will have to work problems out--This can be an issue since it's family 2. It's family so even if it is written you won't follow it.

sound advice. Makes tons of sense thanks. 

2. Yes, property managers will do the work--cost about 10%+ of the rent, depending on the area.  

We use property managers, I guess I was more dreaming that there's some way I could give someone else the rather daunting task of managing a rather tricky and not-so-straightforward entity. Sounds like not so much. 

3. Better option.  It is a promissory note on the property.  If you don't pay they can and should foreclose on the property (makes Christmas uncomfortable).  Not screwing your sister.  Parents are being paid for the level of risk they are assuming--less risk, less reward.  Are you happy with 8%?--if you put 50% down a bank would be better. 

The idea is that we'd invest their money. I'm sure that if we were in different states and markets and spread out we could easily clear 8% and thus protect them and us and everyone. But ya foreclosure would be horrible. Definitely gives a case for equal partnership. 

4. I would avoid family deals unless you don't have other options.  Someone will always feel they did more work, etc.  You will be mad at your parents, your wife will be mad at you, your sister/parents will be mad at you/wife.  Hard to sue business partners.  Really hard to sue family.  It'll be great until the first down market and your parents need cash to pay for X or you need cash for the kids braces.  

Yuuup. You nailed it. Good grief. Business is just tough. Everyone has to be all in. Feels like this might just be the right choice... Push them over the edge. Force them to embrace the work of figuring it out on their own. Scary AF. 

Just partner without the partnership.  They buy their own properties and you buy your own.  No need to pool funds and add complexity when you are buying 8-12 individual properties anyway.  Getting in bed with your family is only acceptable in the south where I live.

I would not touch my parents retirement money or encourage them to invest in real estate.

Far to risky for your parents.

I would borrow their money at a fixed interest rate but would guaranteed the interest payments regardless of the out come of the investment. You can not default on your parents loan regardless of what happens in your life.

Not a good idea to involve retirees in investing in real estate if they need that money to live on.

@Brian Hall I started investing in real estate at age 60.  There are a number of considerations you need to take into account when investing with or for retired folks.  I address some of those areas in BP podcast #191.

If I can be of assistance, feel free to DM me.

Bill