When searching for private capital as down payment on rentals, how are you guys structuring the deal? 50/50 even split. One person brings the capital and one person is the deal provider/manager. 50/50 split on cash flow and equity? Looking to get some suggestions. I have family members who are interested in investing and my capitol is currently tied up right now in a deal.
from my perspective putting up equity in rentals at max debt rarely throws off enough cash flow to pay two people.
That's the way I do it typically.
I find the deal, find insurance, find bank financing, pretty much do all the work.
My investor shows up at closing and signs the docs and brings the money.
It's a money/time trade off.
Are you forming an LLC or LLP for each deal? Are you both on the loan? I just finished reading Matt Faircloth's book on raising private capital but I still have many questions in regards to some of the technical aspects. I would love to pick your brain a bit.
I have my own LLC.
The LLC owns the partnership. I don't form a new partnership for each deal, just for each partner.
I don't use LLCs with non family members. The reason is because in TN you are then subject to F+E taxes. That's just my state specific laws.
And how do you handle the financing? Are you both on the loan? I'm guessing the bank requires all majority members of the LLC