Partnerships - Acquisition/Ownership Ratios
Hello,
I am considering purchasing a duplex with a partner and want advice on how best to share the acquisition cost across the partnership. If I am bringing the deal, handling the property maintenance (securing tenants, dealing with maintenance requests, lawncare etc) what percentage of the total acquisition cost would be considered fair? What percentage of ownership should be expected?
Thank you!
Most Popular Reply
Hi @Dan Frehmeyer, I'd be careful about thinking in terms of a fixed ownership split based solely on responsibilities. In my experience, the best partnerships value each person's contribution independently. If you're sourcing the deal and managing the property, your sweat equity has real value, but it should be clearly defined and compensated. I'd compare the cost of replacing those services with a third party and use that as a starting point rather than assigning an arbitrary percentage.
One thing we've seen reviewing a lot of multifamily deals in our co-investing club is that partnerships fail because expectations weren't clearly documented. Define responsibilities, decision making authority, capital call obligations, how additional contributions are handled, and include a buyout or exit clause before you close.