Buying out a partner
Hello everyone!
I found an off market property that I would like to use the BRRR method on. Due to lack of funds, I will be bringing a partner on to help me. Here is a breakdown of the property:
Duplex - 2BD/1BA each unit Projected rent at $1,300 each unit.
$320,000 - ARV
$50,000 - Rehab
$160,000 - Purchase Price
My question is, what is the best way to buy out a partner? According to my numbers, after the refinance with a 80/20 LTV there would be around $46K profit. Do I just give him the profit and count the equity in the property as my gain? I've never had to buy out a partner so if there are any other factors that I am not thinking of, please let me know :)
No one has responded because your post is not clear. First paragraph says you are bringing on a partner. Second paragraph says you are buying out a partner. Please start over with more detail.
It depends on what type of partner you are bringing in. You could bring in a debt partner who funds the project and you pay them an interest rate say 10-12% until it's refinanced. You are referring to an equity partner. This can be structured many ways. This is usually done with flips, but it can be done with a BRRRR. Make sure there is enough equity in the deal to pay back the investor plus profit and still be able to refinance it.
