Buying & Selling Real Estate Discussion

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Lara Gonzalez
  • Real Estate Agent
  • Redlands, CA
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Buying out a partner

Lara Gonzalez
  • Real Estate Agent
  • Redlands, CA
Posted Jul 1 2019, 18:07

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 :)

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Rich Baer
  • Real Estate Investment Attorney
  • Kingsville, MD
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Rich Baer
  • Real Estate Investment Attorney
  • Kingsville, MD
Replied Jul 4 2019, 16:02

@Lara Gonzalez

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.

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Kenneth Garrett
  • Investor
  • Palatine, IL
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Kenneth Garrett
  • Investor
  • Palatine, IL
Replied Jul 4 2019, 16:12

@Lara Gonzalez

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.