Partnership %?

Question

Just curious what you guys would take as a percentage of a deal for partnerships where the partner would put up 100% of the capital/financing.

Currently have 3 rental properties under contract for but can only close on 2. I spoke with a business mentor about the situation this morning and he suggested that he would be interested in going into the 3rd property with me depending on what I would take from the deal.

I would be managing the deal (rehab+tenants) and he would provide the financing/capital.

What do you guys think?

Timothy Solomon · Answer

Reviving this post. Can anyone answer the above question posted by Nico Roe?

Nico Roe · Answer

Follow on question: what if you were to partner with a general contractor? How would one way his inputs in the form of renovations/waived fee's in bringing the property to market? Lets just say:

100k property

Me: 20k Down payment

Him: 10k in Renovations/Expenses

Would that be a 66/33 split?

Tom Goans · Answer

@Andrew Wu,

Every investor is unique with unique standards for investing. Moreover, every investment consideration is unique and requires independent consideration. It also depends upon what you bring to the table.

In most cases, if I am 100 percent funding the investment opportunity, I would probably not accept less than 95 percent of the partnership on a deal by deal basis.

It appears by your post, you bring very little to the partnership and investment. It would appear the mentor brings both money and experience. Thus, would expect more in return.

As for negotiation with the mentor, a rule I use is the first one to mention a number lost the negotiation. Let the mentor suggest what is acceptable as a percentage of the partnership and the terms. Just do not get greedy.

Caution: I would use this negotiating tactic to learn more about you. What you want as your piece of the pie would be very telling to me and influence my interests in considering being your partner in the future.

• Always remember, he who has the gold rules.
• Additionally, he who has the gold probably has the connections you need.

Andrew Wu · Answer

@Tom Goans Thanks for your feedback. We decided the deal would not be a win/win situation for both of us. My mentor's money and time is better spent elsewhere on his other projects.

Partnership %?

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