When investing in a property using a partner, how do you split the ownership/equity in the property if the other partner provides all the cash while the other partner provides all the knowledge and hustle?
Please give your reasoning for your answer. I want to know how to negotiate with my partner.
Thank you for your response!
A typical JV is 50/50 if one partner brings the capital and the other manages the asset. This, of course, varies based on the situation. One thing I do see is the operations side often taking less than they should because they don't realize their value in the equation.
Understand both roles and if you feel your role is more intensive or carries more risk then of course you have the right to negotiate for a higher percentage. On the other hand realize that if you didn't have the partner would you be able to secure / operate the deal at all... Is a few percentage difference worth the opportunity or not.
@Seth Ferguson how would you go about negotiation with a partner who provides all the cash who disagrees with 50/50 and believe that a 75/25 split is reasonable?
@Osama Mayassi You're selling yourself far short, but it's not my deal.
@Seth Ferguson I am not agreeing to 75/25. However I would like some advice please on how to pitch my partner on a 50/50 split. If you have any experience with partners, how did that go?
The best thing you can do is have another capital partner lined up. You'll need to consider how you're going to present your value and mitigate his risk through your experience and management of the project.
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