Partnership implications and guidelines?

5 Replies

I will be getting into my first sfr in florida this year.  We live in California and have decided to split profits 60/40 as I will do most ofthe work. 

I don't know where to start when it comes to structuring a contract for a buy,  renovate, sell in a year. 

Does anyone have any suggestions where to start?

I think if you are going to have a partnership you should definetly have outside legal advice on the structure. Typically what I have seen is people come in with a list of the key partnership points and then have an attorney draft the agreement for them. Id consider an LLC or some corporate form as well. A decent attorney should be able to advise you on the same.

Given that you want a 60/40 division of anything, there tons of issues you should address in the partnership agreement beyond just the profit split.  You should have an attorney draft a partnership agreement based on a decently-lengthy discussion with them about the goals of the partnership, rights and responsibilities of the members, etc.  How are losses split, the same as the profit ratio or different?  Who makes the decisions?  Is there a vote for major decisions?  What happens if they make an expensive business decision you disagree with?

If you don't address all these and other rights/responsibility issues very specifically in the agreement, you can risk spending thousands in litigation costs.  It's best to have an attorney draft this type of agreement.

how expensive is it to draft something like this?

Originally posted by @John Voychick :

how expensive is it to draft something like this?

 Not very expensive.  Contact an attorney directly for pricing, it varies obviously.

has anyone done a split like this where they do 99% of the work? I'm starting to think 60/40 split is a little low for the work I'm putting in....

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