Partnering up / Entity structure

4 Replies

I am looking to partner with someone out of state from me.  I am bringing the (majority of?) capital and he will be boots on the ground/management.  Additionally, I see this as having potential to be a larger relationship, in which I raise capital from private investors and bring them to him.

Can I please have your recommendations/comments about different ways to structure this, both in the short term and long term.

Thank you in advance!

Originally posted by @Simcha Davidman :

I am looking to partner with someone out of state from me.  I am bringing the (majority of?) capital and he will be boots on the ground/management.  Additionally, I see this as having potential to be a larger relationship, in which I raise capital from private investors and bring them to him.

Can I please have your recommendations/comments about different ways to structure this, both in the short term and long term.

Thank you in advance!

Look into setting up an LLC with each of you having your respective percentages. Have a Joint Venture Agreement that outlines who puts in how much money, how disbursements are made, what happens in the event one of you wants to leave the agreement. Normally you have to cover the who, what, when, where, why and what ifs. My Joint Venture Agreement runs about 10 pages. I don't like surprises and I like everything to be "up front". You might want to take the same stance.

@Mike M. thanks for your reply!  I generally take that position, too.

Is your JV agreement for a single investment, or is it for the entirety of your relationship?

I posted another thread that got pushed down, so if you don't mind, I'll ask you here - any advice on DD about this guy?  We met here on BP and we spoke for about 45 min.  I'm going to travel to him in the next couple of weeks for an in person meeting.  What specific things should I look for, both positive and negative?  And any other feedback on this plan you can give me would be greatly appreciated!

Originally posted by @Simcha Davidman :

@Mike M. thanks for your reply!  I generally take that position, too.

Is your JV agreement for a single investment, or is it for the entirety of your relationship?

I posted another thread that got pushed down, so if you don't mind, I'll ask you here - any advice on DD about this guy?  We met here on BP and we spoke for about 45 min.  I'm going to travel to him in the next couple of weeks for an in person meeting.  What specific things should I look for, both positive and negative?  And any other feedback on this plan you can give me would be greatly appreciated!

 I'm not sure what "any advice on DD about this guy?" means, but I would look for a track record. I'd want to see three recent (last 6 - 12 months) projects he worked on and look at the numbers. If it is a Joint Venture, that is one thing. If you are lending money for a project you open escrow, have a title pulled and record a deed of trust. An attorney does all of that for you. 

For each Joint Venture, I have a Master Agreement that outlines the general agreement and then I have a Specific Agreement for each property. 

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