Structuring Partnerships from the Outset

[Account Closed]

I hear many of the podcast guest mention partnerships. My question is: How do you recommend setting up the partnerships from the beginning so that both partners have the same vision and goals in mind for a property? Just some differences of opinion I could see coming up would be when to refinance, how long to hold, etc. 

[James E.]

@Account Closed Kind of something you need to work out with your specific partner and really depends on what each of you is looking for. Also depends on what kind of deal you're doing. A few "common" ways of doing it are 

- one person brings cash, one person does the work, finds the deal, manages rehab / tenants etc., equal or some % split of profits

- equal split of cash, both people involved with day to day, equal split of profits

- syndicated deals are a bit more complex and follow a gp / lp model

In terms of exit strategy, I think you already said it. You both just need to be on the same page with what you're looking for and how long you want to hold, and what the contingencies are if one of you wants to sell or refi. I would even retain a local real estate atty for a couple hundred bucks to help you draft your operating agreements and think through possible contingencies. 

It would be helpful to the forums if you could be a bit more specific with your question so that we can chime in with more helpful and specific answers